Which principle states that buyers purchase the present worth of future benefits?

• A. The Principle of Anticipation
• B. The Principle of Balance
• C. The Direct Comparison Approach
• D. The Income Approach

Answer: (A)

Value is driven by the expectation of future benefits, so buyers today pay for the present worth of what those benefits will bring in the future. This idea is the Principle of Anticipation. In real estate, the future benefits can be rental income, enjoyment, or potential appreciation, and investors convert that expected future stream into a lump-sum value today. The Direct Comparison Approach relies on prices of similar recent sales to estimate value, which is a method rather than a principle about future benefits. The Income Approach is another valuation method that uses income streams to arrive at value, not the fundamental idea about present worth of future benefits. The Balance concept relates to harmony in use or design, not to how value reflects anticipated future benefits.