Property Valuation
Which of the following best describes the principle of substitution?
AA property's value is determined solely by its replacement cost
BA buyer will pay no more for a property than the cost of acquiring an equally desirable substitute✓ Correct
CValue is created by the anticipation of future benefits
DProperties in the same neighborhood should have similar values
Explanation
The principle of substitution holds that a prudent buyer will pay no more for a property than the cost to acquire an equally desirable alternative. This principle underlies all three approaches to value used in appraisal.
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