What does the principle of Substitution state?

The principle of Substitution states that a property will not sell for more than a comparable property of equal desirability. This principle is based on the idea that buyers will not pay a premium for a property when a similar, equally desirable property is available for a lower price. It emphasizes the importance of market comparisons and highlights the concept that the value of a property is determined by the cost of acquiring a comparable substitute in the marketplace. Essentially, it suggests that a willing buyer will act rationally and seek the best value, which keeps property values within a competitive range relative to similar properties. This is a key concept in real estate valuation and is used by appraisers to ensure that property pricing reflects the realities of the market.