What economic principle suggests that a property's maximum value is set by the lowest price of a similar property?

The principle of substitution is fundamental in real estate appraisal, as it asserts that a property's maximum value is influenced by the price of comparable properties in the market. If a buyer has the option to purchase a similar property for a lower price, they are unlikely to pay more for the subject property. This principle is rooted in the idea that rational buyers will seek alternatives that offer equivalent utility and features at a lower cost. Therefore, the lowest price of a comparable property effectively sets a ceiling on what buyers might be willing to pay for the property in question. This reflects the market's dynamics and reinforces the competitive nature of real estate transactions, where buyers seek the best value for their investment.