Property Valuation
The 'principle of contribution' in real estate valuation states that:
AA. A property is worth the sum of its parts
BB. The value of a component of a property is measured by how much it contributes to the value of the whole, not by its cost✓ Correct
CC. All improvements add their full cost to value
DD. Land contributes more to value than improvements
Explanation
The principle of contribution holds that the value of any part of a property is measured by how much it adds to the value of the whole — not by its individual cost. For example, a $50,000 pool may only add $20,000 to the property's market value.
Related Colorado Property Valuation Questions
- In an appraisal, 'reconciliation' (final value estimate) requires the appraiser to:
- A Colorado apartment complex has 12 units each renting for $1,500/month. Using a GRM of 120, what is the indicated market value?
- An appraiser uses the cost approach to value a Colorado commercial property. The replacement cost new is $800,000 and the property has 25% depreciation. The land is worth $150,000. What is the indicated value?
- USPAP (Uniform Standards of Professional Appraisal Practice) requires all licensed Colorado appraisers to:
- A Colorado appraiser calculates the value using the cost approach as follows: land value $80,000; replacement cost new $350,000; accrued depreciation 20%. What is the indicated value?
- The sales comparison approach to value is most commonly used for:
- A Colorado buyer pays $375,000 for a home where comparable sales support a value of $350,000. The $25,000 overpayment is likely due to:
- A Colorado appraiser who has a personal relationship with the lender who ordered the appraisal, which could influence their judgment, must:
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