Valuation and Analysis, 14% of the examination
Principle of contribution
A component is worth what it adds to the value of the whole property, not necessarily what it cost.
A renovation can cost more than the market value it creates, or add more value than its cost. Contribution explains why appraisers use market reaction rather than contractor invoices alone when adjusting for a feature.
Primary sources
Use these authorities when a course summary, forum answer, or older flashcard conflicts with the current California rule.
Where this is tested
Property Valuation and Financial AnalysisAll three official DRE valuation topics in one practical guide: value principles, the sales comparison, cost and income approaches, and the financial analysis that turns property data into a defensible answer.14%Practice Valuation and Analysis28 questions on this area, every option explained.Practice