What are the principles of value in real estate?

The principles of value in real estate are crucial concepts that guide appraisers in determining the worth of a property. The chosen answer correctly identifies anticipation, change, competition, conformity, and contribution as the fundamental principles that influence real estate values.

Anticipation refers to the idea that value is influenced by the expectation of future benefits or income. For instance, if a property is expected to appreciate over time due to improvements in the surrounding area, this potential for future value can enhance its current market worth.

Change is an important principle as it recognizes that real estate markets are dynamic. Economic conditions, demographic shifts, and local legislation can all impact property values over time. Appraisers must consider how these changes might influence current and future values.

Competition addresses the impact of similar properties in the market. When multiple properties vie for the same buyer, it can either drive prices up or down based on their features and conditions relative to one another. An appraiser must take into account comparable sales and market trends when determining value.

Conformity refers to the idea that properties tend to achieve maximum value when they are in harmony with their surroundings. A well-maintained home in a neighborhood with similar characteristic properties tends to hold its value better than one that is dissimilar or poorly maintained