What principle states that value is created by the expected future benefits to be derived from the property?

What principle states that value is created by the expected future benefits to be derived from the property?

• A. Contribution
• B. Ascertainment
• C. Anticipation
• D. Appreciation

Answer: (C)

The principle that states value is created by the expected future benefits to be derived from the property is known as the anticipation principle. This principle underscores the idea that the value of a property is primarily based on the potential income or benefits that the property can generate in the future. In real estate appraisal, this means that potential buyers consider the future cash flows, appreciation in value, or other benefits when evaluating how much they are willing to pay for a property today. The expectation of these future benefits influences the market value significantly, as buyers will pay a price that reflects their anticipation of these benefits. This concept is particularly important in investment properties, where the expected rental income can vastly influence the perceived value. Understanding this principle helps appraisers make more informed estimates of property values based on projected future performance rather than just current or past conditions.

The principle that states value is created by the expected future benefits to be derived from the property is known as the anticipation principle. This principle underscores the idea that the value of a property is primarily based on the potential income or benefits that the property can generate in the future.

In real estate appraisal, this means that potential buyers consider the future cash flows, appreciation in value, or other benefits when evaluating how much they are willing to pay for a property today. The expectation of these future benefits influences the market value significantly, as buyers will pay a price that reflects their anticipation of these benefits.

This concept is particularly important in investment properties, where the expected rental income can vastly influence the perceived value. Understanding this principle helps appraisers make more informed estimates of property values based on projected future performance rather than just current or past conditions.