The appraisal principle of substitution holds that a buyer will pay no more for a property than the cost of acquiring an equally desirable substitute. Which of the following best reflects this principle?
Correct Answer
A) A buyer will pay no more for a property than the cost of an equally desirable alternative property
The principle of substitution is a foundational appraisal concept stating that a rational buyer will pay no more for a property than the cost of acquiring an equally desirable substitute — whether by purchase or construction. This principle underpins the sales comparison approach and the cost approach to appraisal, as buyers will not overpay when comparable alternatives are available.
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