Property Valuation
In New Mexico, the 'principle of substitution' underlies all three appraisal approaches because:
AAll properties can be substituted for one another
BA buyer will not pay more for a property than the cost of acquiring an equally desirable substitute — setting a ceiling on value✓ Correct
CAll appraisal methods produce the same value
DSubstitution applies only to income properties
Explanation
The principle of substitution holds that a rational buyer will not pay more for a property than they would pay for an equally desirable alternative. This underpins comparable sales adjustments, replacement cost logic, and income capitalization.
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