Property Valuation
In New York, the 'principle of substitution' underpins which approach to value?
AThe income approach only
BAll three approaches to value (cost, sales comparison, and income)✓ Correct
COnly the sales comparison approach
DOnly the cost approach
Explanation
The principle of substitution — which holds that a buyer will not pay more for a property than the cost of acquiring an equally desirable substitute — underpins all three appraisal approaches. In the sales comparison approach, buyers compare alternatives. In the cost approach, buyers compare building costs. In the income approach, investors compare alternative investments offering similar returns.
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