Property Valuation
The principle of contribution in real estate appraisal states that:
AThe value of a component is equal to its cost
BThe value of a component is measured by its contribution to the overall value of the property✓ Correct
CAll improvements increase property value by their full cost
DLocation is the most important factor in value
Explanation
The principle of contribution holds that the value of any component is what it contributes to the total value of the property, which may be more or less than its actual cost.
Related North Carolina Property Valuation Questions
- The income approach to value is most appropriate for which type of NC property?
- When a NC appraiser uses a market extraction method to determine a capitalization rate, they analyze:
- Effective gross income (EGI) in an income analysis is calculated as:
- The sales comparison approach to value is most appropriate for:
- In the income approach, the 'overall capitalization rate' (OAR) differs from a 'mortgage capitalization rate' in that the OAR:
- The 'gross rent multiplier' (GRM) method is considered a quick, simplified income approach. It does NOT account for:
- An NC appraiser analyzing a condominium uses which modification to the sales comparison approach?
- When adjusting comparables in the sales comparison approach, the appraiser adjusts the comparable, not the subject. If a comp has a superior feature, the adjustment is:
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