The principle of substitution in real estate appraisal states that:
Correct Answer
A) A buyer will pay no more for a property than the cost of acquiring an equally desirable substitute
The principle of substitution holds that a rational, informed buyer will pay no more for a property than the cost of acquiring an equally desirable and available substitute property. This principle forms the foundation of the sales comparison approach to appraisal, as it assumes buyers will compare similar properties and will not overpay when comparable alternatives exist. This principle applies uniformly in Alaska real estate valuation.
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