What does the appraisal principle of anticipation suggest?

The appraisal principle of anticipation suggests that the value of a property is largely determined by the future benefits or detriments expected from that property. This principle posits that buyers are not only interested in the current state of a property but also in what they anticipate that property will yield in the future.

For example, if a property is located in an area where new developments, such as schools, parks, or shopping centers, are planned, potential buyers may see increased value in that property due to the anticipated benefits these developments will bring. Conversely, if a property is situated in a declining area or near something that could detract from its desirability—like a new highway or an industrial complex—its expected future value could diminish.

This principle is fundamental in real estate appraisal as it underlines the reality that anticipated future conditions significantly influence current value, aligning well with how market behaviors and buyer perceptions operate in the real estate market.