Property Valuation
The principle of ANTICIPATION in appraisal states that:
AValue is determined by what the property currently produces
BValue is based on the future benefits (income, utility) that the property is expected to provide✓ Correct
CThe highest value is achieved when all land uses are the same
DProperties in the same neighborhood will reach the same value over time
Explanation
The principle of anticipation holds that value is created by the expectation of future benefits—buyers purchase based on what they expect the property to provide or be worth in the future.
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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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