Property Valuation
The 'principle of substitution' in real estate appraisal states that:
AA property's value is based on its historical cost
BA buyer will pay no more for a property than the cost of acquiring an equally desirable substitute✓ Correct
CThe highest priced home sets the standard for the neighborhood
DDepreciation always reduces property value below replacement cost
Explanation
The principle of substitution underlies the sales comparison approach: a rational buyer will pay no more for a property than the price of acquiring a comparable substitute property.
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