The principle of 'anticipation' in real estate valuation states that:
Why Current property values reflect the present value of anticipated future benefits Is Correct
Answer A: Current property values reflect the present value of anticipated future benefits
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.
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- The principle of anticipation states that value is:Property Valuation
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- In the income approach to valuation, Net Operating Income (NOI) is calculated as:Property Valuation
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Key Terms to Know
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.
AppraisalA 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.
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