Property Valuation
The principle of substitution in Nevada real estate appraisal states that:
AAdding an improvement always increases value by the cost of the improvement
BA buyer will pay no more for a property than the cost of acquiring an equally desirable substitute property✓ Correct
CThe value of a component depends on how much it contributes to the whole
DFuture benefits are discounted to present value
Explanation
The principle of substitution is the foundation of the sales comparison approach: a prudent buyer will pay no more for a property than the cost of purchasing an equally desirable substitute property. This sets a ceiling on value.
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