Property Valuation
The principle of 'anticipation' in real estate valuation states that:
ACurrent property values reflect the present value of anticipated future benefits✓ Correct
BProperty values are determined by historical sales prices only
CThe market anticipates that all properties will eventually depreciate to zero value
DBuyers should always offer less than asking price in anticipation of negotiation
Explanation
The principle of anticipation holds that value is created by the expectation of future benefits (income, appreciation, use). Buyers pay today's price based on what they expect the property to deliver in the future, forming the conceptual basis for the income approach.
Related California Property Valuation Questions
- What is a capitalization rate (cap rate)?
- Under USPAP (Uniform Standards of Professional Appraisal Practice), a licensed appraiser must retain the workfile for a completed appraisal for a minimum of:
- The principle of substitution states that:
- The principle of anticipation states that value is:
- External obsolescence (economic obsolescence) is caused by:
- Gross Rent Multiplier (GRM) is calculated as:
- Net Operating Income (NOI) is calculated as:
- A property generates a net operating income of $50,000 and is valued using a 5% cap rate. What is the estimated value?
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