Property ValuationIntermediateArizona Exam

The principle of anticipation in real estate appraisal holds that:

ABuyers anticipate future costs of ownership

BValue is created by the expectation of future benefits (income, use, enjoyment) from the propertyCorrect

CAppraisers anticipate future market changes in their estimates

DBuyers anticipate price reductions and offer less than asking price

Why Value is created by the expectation of future benefits (income, use, enjoyment) from the property Is Correct

Answer B: Value is created by the expectation of future benefits (income, use, enjoyment) from the property

The principle of anticipation recognizes that value reflects the present worth of expected future benefits—income, utility, or enjoyment—that the property will provide to the owner.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.

Key Property Valuation Terms in This Question

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

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Key Terms to Know

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Capitalization Rate (Cap Rate)

A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.

Gross Rent Multiplier (GRM)

A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.

Comparable Sales (Comps)

Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.

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