Property Valuation
The principle of substitution, which underlies all three approaches to value, states that:
AA property's value is determined by future income potential
BNo buyer will pay more for a property than the cost to acquire an equally desirable substitute✓ Correct
CValue is equal to the cost of construction plus the land value
DSimilar properties in the same market will always sell for the same price
Explanation
The principle of substitution holds that a rational buyer will not pay more for a property than the cost to acquire a comparable substitute. This principle underlies the sales comparison, cost, and income approaches to value.
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