Property Valuation
The principle of substitution states that a buyer will pay no more for a property than the cost of acquiring an equally desirable substitute. This principle underpins the:
AIncome approach only
BCost approach only
CSales comparison approach only
DAll three approaches to value✓ Correct
Explanation
The principle of substitution is foundational to all three appraisal approaches. In the sales comparison approach it justifies using comparable sales; in the cost approach, replacing at current cost; in the income approach, investing in alternative income-producing assets.
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