Which appraisal principle assesses the value of a property's component based on its contribution to the whole?

The principle that assesses the value of a property's component based on its contribution to the whole is known as the Contribution principle. This principle is fundamental in real estate appraisal as it emphasizes that the value of a part is determined by the value it adds to the overall property.

For example, if you have a property with a significant addition, like a swimming pool, the Contribution principle would evaluate how much value that pool adds to the entire property. If the cost to install the pool is higher than the increase in market value it provides, then its contribution would be viewed as less effective. Conversely, if the pool increases the overall property value substantially, then it demonstrates a positive contribution.

This principle is essential for understanding how different features and improvements affect property valuation, ensuring that appraisals accurately reflect the market value based on individual contributions. Other principles, like Scarcity, Substitution, and Highest and Best Use, serve different roles in real estate assessment and do not specifically focus on the individual contributions of property components.