Property Valuation
Which appraisal concept holds that value is influenced by the expectation of future benefits?
ASubstitution
BAnticipation✓ Correct
CContribution
DConformity
Explanation
The principle of anticipation holds that value is the present worth of anticipated future benefits (income, use, or resale value). Buyers pay today based on their expectations of future value.
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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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
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