The principle that states value is created by expected future benefits is known as?

The principle that states value is created by expected future benefits is known as anticipation. This principle is foundational in property appraisal and valuation, as it recognizes that the worth of a property is closely tied to the benefits that the property is expected to generate over time. This can include future income from rent, appreciation in value, or other financial benefits that prospective buyers or investors foresee.

Understanding this principle is crucial because it highlights the importance of forecasting and assessing potential future conditions that may affect the property’s value. For instance, trends in the local economy, anticipated developments, or changes in zoning laws can all influence how future benefits are perceived, ultimately affecting the value stakeholders assign to the property today.

Other terms related to valuation, such as future value and present worth, encompass different concepts: future value refers to the value of an investment at a future date based on an assumed rate of growth, while present worth pertains to the calculated value of an asset at the current time considering future benefits. Expectation, while related, does not specifically capture the essence of how future benefits contribute to current value in the context of property appraisal. Thus, anticipation is the precise term that encapsulates the idea that value is derived from expected future benefits.