Property Valuation
The principle of contribution states that the value of any component of a property is:
AEqual to its replacement cost
BWhat its presence adds to (or its absence subtracts from) the total property value✓ Correct
CDetermined by its original purchase price
DBased on the assessed value assigned by the county
Explanation
The principle of contribution measures the value of a specific component by its contribution to the overall property value — not by its cost to install.
Related Alabama Property Valuation Questions
- In the income approach, which formula is used to estimate property value?
- The USPAP (Uniform Standards of Professional Appraisal Practice) is:
- A property manager reports the following: Gross potential income $120,000; Vacancy 5%; Operating expenses $40,000. What is the NOI?
- The income approach to appraisal is MOST commonly used for:
- A residential property's square footage of gross living area (GLA) is measured:
- An appraiser applies a 7% cap rate to a NOI of $42,000. What is the estimated property value?
- Net income ratio (NIR) is calculated as:
- The principle of 'regression' in real estate value states that:
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