Property Valuation
The 'principle of substitution' in real estate appraisal holds that:
AA property can be replaced with a similar one at a lower cost
BA buyer will not pay more for a property than the cost to acquire an equally desirable substitute✓ Correct
COne comparable sale can substitute for another in the appraisal
DImprovements should be substituted when they become outdated
Explanation
The principle of substitution is the foundation of all three appraisal approaches. It holds that a prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute in a competitive market.
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