Property Valuation
What is 'anticipation' as a principle in Rhode Island real estate valuation?
AThe principle that current value is influenced by expected future benefits✓ Correct
BThe principle that property value increases over time
CThe principle that appraisers must anticipate the buyer's preferences
DThe principle that market conditions are always improving
Explanation
The principle of anticipation states that value is created by the expectation of future benefits. Buyers pay for a property based on the income, utility, or amenity they expect to receive, not just what the property has generated in the past.
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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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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