Property Valuation
The principle of substitution in New Mexico appraisal states that:
AA property's value is determined by the income it produces
BA buyer will not pay more for a property than the cost to acquire an equally desirable substitute property✓ Correct
CImprovements add value equal to their cost
DProperties near similar properties have similar values
Explanation
The principle of substitution is the foundation of all three appraisal approaches: a rational buyer won't pay more for a property than the cost of acquiring an equally desirable alternative.
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