According to the Principle of Contribution, what determines the value of a component of property?

The Principle of Contribution states that the value of a component of property is determined by how much that component adds to or enhances the overall value of the property. This principle suggests that the worth of any specific feature or improvement should be measured by its ability to increase the total value of the property, rather than by its standalone worth or appeal.

For example, if a home has a swimming pool, the value added by that pool is not just based on how much people desire pools in general, but rather on how much that pool enhances the market value of the entire property. If the pool increases the property value significantly when compared to properties without a pool in the area, then it is deemed to have a high contribution.

While factors such as individual market demand, historical significance, and aesthetic appeal can influence how appealing a property is to buyers, they do not directly reflect the financial contribution that a component makes to the property's value. Thus, understanding the Principle of Contribution provides a clear framework for property valuation, linking the worth of individual components to their impact on overall property value.