Property Valuation
The principle of 'contribution' in real estate appraisal states that:
AA property's value is determined by the sum of all its improvements
BThe value of a component is measured by its contribution to the total value of the property✓ Correct
CAll properties contribute to their neighborhood's overall value
DProperty values are contributed to by market conditions outside the property
Explanation
The principle of contribution states that the value of any component of a property is measured by how much it adds to the total value of the property, not by its cost. A swimming pool costing $50,000 may only add $20,000 in market value.
Related Oregon Property Valuation Questions
- In the income approach to value, what does the term 'capitalization rate' represent?
- What is a 'broker price opinion' (BPO) and how does it differ from a formal appraisal in Oregon?
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- Which Oregon property type is MOST likely to be appraised using the income capitalization approach as the PRIMARY method?
- A property produces a net operating income (NOI) of $60,000 per year. If the capitalization rate is 6%, the property's estimated value using the income approach is:
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