Property Valuation
The principle of substitution in appraisal holds that:
AA property's value is determined solely by its income-producing potential
BA buyer will not pay more for a property than the cost to acquire an equally desirable substitute✓ Correct
CValue increases when supply decreases and demand increases
DLand is permanent and always increases in value over time
Explanation
The principle of substitution is the foundation of all three appraisal approaches. It holds that the maximum value of a property is set by the cost of acquiring an equally desirable and valuable substitute. This principle underlies why buyers compare alternatives before setting a maximum purchase price.
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