Property Valuation
The principle of 'substitution' in real estate appraisal states that:
AA buyer will pay more for a unique property
BThe maximum value of a property is limited by the cost to acquire an equally desirable substitute✓ Correct
CImprovements always add their full cost to value
DValue is determined solely by government assessment
Explanation
The principle of substitution holds that a prudent buyer will not pay more for a property than the cost to acquire an equally desirable substitute property. This principle underlies all three appraisal approaches.
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