PSI Virginia Real Estate Practice Exam

What principle suggests that the value of a property is influenced by the potential future benefits to buyers?

1. Principle of Demand, Supply, and Desire

2. Principle of Anticipation

3. Principle of Substitution

4. Principle of Balance

The correct answer is: Principle of Anticipation

The principle that suggests the value of a property is influenced by the potential future benefits to buyers is the Principle of Anticipation. This principle posits that buyers are willing to pay a premium for properties that they believe will appreciate in value due to expected future benefits, such as developments in the surrounding area, improvements in local amenities, or other factors that can enhance their quality of living or investment return. Essentially, when buyers anticipate that a property will yield greater value in the future, they may assign it a higher current value. This principle is fundamental in real estate as it emphasizes the forward-looking nature of property investment and the importance of market trends and projections in assessing property value. In contrast, the other options focus on different real estate principles. The Principle of Demand, Supply, and Desire relates to how the interplay of these factors affects market pricing in a more immediate context; the Principle of Substitution discusses how a buyer will opt for a similar property if it provides a better price or value; and the Principle of Balance highlights the equilibrium between various market elements, such as supply and demand, rather than the future outlook that drives decisions today.