Property ValuationIntermediateDelaware Exam
The principle of 'contribution' in real estate appraisal states that:
AEach improvement adds its full cost to the property's value
BThe value of any component is measured by how much it contributes to the value of the wholeCorrect
CEach added bedroom contributes equally to value
DProperty value is the sum of all individual improvements
Why The value of any component is measured by how much it contributes to the value of the whole Is Correct
Answer B: The value of any component is measured by how much it contributes to the value of the whole
The principle of contribution holds that the value of any improvement (or its absence) is measured by the amount it adds to (or subtracts from) the total value of the property, not by its cost.
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
Key Property Valuation Terms in This Question
Related Delaware Property Valuation Questions
- Functional obsolescence in an appraisal refers to:Property Valuation
- What is 'under-improvement' in Delaware real estate appraisal?Property Valuation
- Which principle of value holds that value is created by the expectation of benefits to be received in the future?Property Valuation
- In the income approach to value, a lower capitalization rate results in:Property Valuation
- Reproduction cost in the cost approach is the cost to:Property Valuation
- Capitalization rate (cap rate) is calculated as:Property Valuation
- What is 'plottage' in real estate valuation?Property Valuation
- In Delaware appraisal practice, what is 'highest and best use'?Property Valuation
Practice More Delaware Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Delaware Quiz →