Property Valuation
In real estate appraisal, what is the principle of 'substitution'?
AA. A buyer will pay no more for a property than the cost of acquiring an equally desirable substitute✓ Correct
BB. All properties are unique and cannot be substituted
CC. Inferior properties benefit from proximity to superior ones
DD. Property value is determined by its highest use
Explanation
The principle of substitution holds that a prudent buyer will pay no more for a property than the cost of acquiring an equally desirable alternative. This principle underlies all three approaches to value: sales comparison, cost, and income.
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