The Principle of Substitution suggests that market value is influenced primarily by what factor?

The Principle of Substitution is a key concept in valuation that states an informed buyer will not pay more for a property than it would cost to acquire an equally desirable substitute property. This principle emphasizes that the market value of a property is influenced primarily by the availability and cost of comparable properties in the market. When a buyer considers a property, they assess its value based on the cost of similar properties available at the same time; if a property is more expensive than another with similar features, the buyer will likely choose the less expensive option.

Factors such as a property's age, historical significance, improvements made by the owner, or its location can certainly affect its market value, but the core idea of the Principle of Substitution is that market value is fundamentally linked to what buyers are willing to pay based on available alternatives. Therefore, the correct answer reflects this principle accurately by highlighting the significance of acquiring a similar substitute property in determining market value.