Certified Residential Appraiser Practice Exam

What principle refers to the expectation of benefits from future value?

1. Principle of balance

2. Principle of anticipation

3. Principle of conformity

4. Principle of change

The correct answer is: Principle of anticipation

The principle that refers to the expectation of benefits from future value is the principle of anticipation. This principle is based on the idea that the value of a property is influenced by the benefits that the property is expected to generate in the future. These benefits can manifest as rental income, appreciation, or potential resale value. Anticipation recognizes that buyers make purchasing decisions not solely based on current conditions but also considering what they believe the future holds for that property. Therefore, the perceived future income and appreciation contribute to the property’s current market value. This underscores the importance of assessing future trends and the economic environment when appraising property values. In contrast, the other principles focus on different aspects of value determination, such as balance in value factors, conformity to neighborhood trends, and the evolving nature of property values over time. While each of these principles has its significance in the appraisal process, none directly address the expectation of future benefits in the same way that the principle of anticipation does.