What principle does Contribution refer to in property appraisal?

Contribution in property appraisal refers to the idea that the value of a specific improvement is determined by the amount it adds to the overall market value of the property. This principle emphasizes that not all improvements increase the property's value equally; rather, their value is relative to how much they enhance the property's overall worth in the eyes of potential buyers.

For example, if a property owner invests in a swimming pool, the increase in the property's market value due to that pool should be considered. If the pool adds significant appeal and market value, its contribution is high. Conversely, if the pool does not attract buyers or leads to a decrease in value, the contribution is low. This principle helps appraisers analyze which improvements are most beneficial in increasing market value and guides property owners in making informed decisions about renovations or additions.

By focusing on the impact of an improvement on market value, this principle allows for a more accurate assessment of a property's worth, tailoring it closely to buyer expectations and market conditions.