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Valuation & Market Analysis term

Principle of Anticipation

The idea that value is created by the expectation of future benefits a property will provide.

Why Principle of Anticipation matters on the exam

This term belongs to Valuation & Market Analysis. The questions below are real items from Freehold's bank that use it - each one cites its source.

Exam questions using Principle of Anticipation

Every Freehold question shows why the right answer is right — and cites its source.

A buyer refuses to pay more for a home than the cost of a similar home nearby. This illustrates which principle of value?

  1. Principle of anticipation
  2. Principle of conformity
  3. Principle of substitution
  4. Principle of contribution
Show answer & explanation

Principle of substitution — The principle of substitution holds that a buyer will not pay more for a property than the cost of acquiring an equally desirable substitute. It underlies the sales comparison approach to value.

Source: PSI National Real Estate Exam Content Outline §3 Valuation & Market Analysis

An investor pays a premium price for a vacant lot today because she expects the surrounding area to be rezoned for commercial use next year. This decision reflects the principle of:

  1. Conformity
  2. Regression
  3. Balance
  4. Anticipation
Show answer & explanation

Anticipation — The principle of anticipation holds that value is created by the expectation of future benefits, such as anticipated rezoning, income, or appreciation.

Source: PSI National Real Estate Exam Content Outline §3 Valuation & Market Analysis

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