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 an equally desirable substitute
The principle of substitution holds that a prudent buyer will pay no more for a property than the cost of acquiring an equally desirable and functional substitute property. This principle is the foundation of the sales comparison approach and the cost approach to appraisal, as it assumes buyers will choose the least expensive option among comparable alternatives.
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