Which principle of value relates to how a change to a portion of a property impacts its overall value?

The principle of contribution is essential in real estate appraisal as it determines how much value an improvement or change to a specific portion of a property adds to the overall value of the entire property. This principle is based on the idea that an enhancement or detriment to a property’s features or conditions has a measurable impact on its market value.

For example, if a homeowner adds a swimming pool to a property, the principle of contribution helps assess how much that pool increases the overall market value of the home. If the cost of the pool was $30,000 but it only added $20,000 in value to the property, the principle illustrates that not all improvements equate to dollar-for-dollar increases in property value.

Understanding this principle allows appraisers to make informed judgments about improvements or renovations, assessing whether they are worth pursuing based on how much value they are likely to contribute. An appraiser might similarly use this information to advise homeowners on potential renovations that will add significant value or to highlight improvements that may not contribute to the property value despite their costs.

While the other options touch on relevant concepts—like the idea of plottage referring to the added value created when two or more parcels are merged, or progression addressing how a property benefits from its surroundings