Property Valuation
In Maryland, the principle of contribution states that the value of a component is measured by:
AIts cost to install
BWhat it adds to the overall property value, which may be more or less than its cost✓ Correct
CIts replacement cost new
DThe market value of the component separately
Explanation
The principle of contribution measures value by what a feature contributes to total property value — not by its cost. A swimming pool may cost $50,000 but only contribute $15,000 to market value.
Related Maryland Property Valuation Questions
- Which professional is required to perform an appraisal for a federally regulated mortgage transaction in Maryland?
- The market value of a Maryland property is best defined as:
- When an appraiser uses the income approach to value a Maryland apartment building with a NOI of $90,000 and a cap rate of 7.5%, what is the estimated value?
- A Maryland rental property generates $36,000 net operating income annually. Using a 6% capitalization rate, the indicated value is:
- Which principle of value states that the value of a property is affected by the values of surrounding properties?
- Reconciliation in a Maryland appraisal means:
- The cost approach to value calculates:
- Reproduction cost and replacement cost differ in that:
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