Appraisal Principles Flashcards

Appraisal Principles Flashcards What are the appraisal principles?Supply and demand, Anticipation, Substitution, Conformity, Contribution, Competition, Change, Highest and best use, Regression and progression AnticipationThe principle of anticipation is commonly used in commercial and income properties. This principle regards how the property may benefit the owner over time. The owner is in anticipation of future benefits.Supply and DemandSupply is the amount of a product that can be offered by a market. Demand regards the willingness and ability of buyers in a market to purchase products.Highest and Best UseThe principle of highest and best use states that the value of the property being appraised should be calculated based on what the most productive use of the property could be.Regression and ProgressionThe principle of regression states that when a superior property is placed in an area of properties that are of lower quality, the superior property's value is diminished.The principle of progression states that when a low quality property is placed in an area of properties that are superior, the low quality property's value is enhanced.SubstitutionThe substitution principle is used in the price comparison approach in appraising properties. We will cover this thoroughly in the next lesson.ChangeThe appraisal principle of change regards property values changing due to outside circumstances like economical, political and social forces.ConformityThe principle of conformity regards how well a property fits into its surroundings.ContributionThe principle of contribution regards how well aspects or features of a property contribute to the property as a whole.CompetitionThe competition principle regards the value of a property compared to another very similar property.