What is one of the basic economic principles used in appraising?

The principle of anticipation is fundamental in the field of appraisal because it reflects the idea that the value of a property is determined not just by its current condition or past performance, but also by the expected future benefits it will produce. This principle is essential for assessors and appraisers as they evaluate properties; they must consider the potential for income, appreciation, and other benefits that a property might yield over time.

In practical terms, if a property is expected to generate rental income or experience a rise in value due to development in the area, this anticipated future cash flow becomes a critical factor in determining its current value. Appraisers often use this principle when applying income approaches to valuation, where they analyze expected future income streams to assess a property's worth.

While inflation, depreciation, and investment are all relevant economic concepts, they serve different purposes in the appraisal process. Inflation is concerned with the general price level increase affecting costs and values, while depreciation pertains to factors leading to a decline in value over time. Investment relates to the capital put into a property, but it does not encapsulate the future value perception as effectively as the principle of anticipation does.