Property Valuation
The principle of 'substitution' in real estate appraisal states that:
ANew properties are always worth more than old ones
BA buyer will pay no more for a property than the cost of acquiring an equally desirable substitute✓ Correct
CCommercial properties substitute for residential properties in valuation
DOne appraiser can substitute for another
Explanation
The principle of substitution is the basis for all three appraisal approaches. It states that a rational buyer will pay no more for a property than the cost of an equally desirable alternative — whether another property or construction cost.
Related Missouri Property Valuation Questions
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