Property Valuation
In Alaska, the 'principle of anticipation' states that value is based on:
AHistorical transaction prices
BThe expected future benefits of owning the property✓ Correct
CThe replacement cost of improvements
DThe current assessed value for tax purposes
Explanation
The principle of anticipation holds that value is created by the expectation of future benefits — including income, appreciation, and enjoyment. Buyers purchase based on what they expect to receive in the future, not just current conditions.
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Key Terms to Know
Capitalization Rate (Cap Rate)
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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