Principle of Anticipation

December 13, 2019

Investors should also consider future changes in anticipated demand caused by off-site improvements like highways, bridges, schools, and parks. These have an important impact on value even though such improvements may be in the planning stage and not visible at the time of the purchase. Because the present value of real estate depends on expected future benefits, the principle of anticipation is important to an investor and he/she should make sure that they are fully informed of community affairs and economic changes anticipated in the market area in which the subject property is located.

It is the future, and not just the past, with which an investor must be concerned. The history of operation of the investment property is important only in ascertaining a trend in anticipated earnings.

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