Property Valuation
The principle of substitution states that a buyer will pay no more for a property than:
AIts assessed value for tax purposes
BThe cost to acquire an equally desirable substitute property✓ Correct
CThe amount the seller originally paid
DThe appraised value determined by the lender
Explanation
The principle of substitution holds that the maximum value of a property is set by the cost of acquiring an equally desirable substitute. This principle underlies the sales comparison and cost approaches.
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