Tennessee Real Estate Exam Practice Question
A developer buys an empty lot next to a new light-rail stop expecting rents to rise once the station opens. This illustrates which principle of value?
Correct Answer: C
Rationale: The principle of anticipation focuses on the expectation of future benefits influencing current value. In this scenario, the developer anticipates that the opening of the light-rail station will increase demand for rental properties, thus raising rents.
Option A, change, refers to the dynamic nature of property values over time, but does not specifically address the expectation of future benefits.
Option B, contribution, relates to how specific improvements affect property value, which is not the main focus here.
Option D, highest and best use, involves determining the most profitable use of a property, but does not directly capture the anticipation of future rent increases due to the new station.
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