An appraiser analyzes three paired sales to isolate the effect of a fireplace. In Pair 1, the property with a fireplace sold for $12,000 more; in Pair 2, $10,500 more; and in Pair 3, $13,500 more. All pairs are highly similar and recent. The appraiser selects $12,000 as the final adjustment. Which principle best supports this selection?

Correct Answer

B) The principle of contribution, because the fireplace adds value only to the extent it contributes to total utility

Why this is correct: The principle of contribution holds that a component's value is the amount it adds to the value of the whole, which may be more or less than what it cost to install. Paired sales measure exactly that: each pair reports what the market paid for an otherwise similar property because it had a fireplace. The three indications of $12,000, $10,500 and $13,500 cluster tightly, and $12,000 sits at both their midpoint and their median, so selecting it applies contribution to market-derived evidence rather than to cost or to opinion. Why the other choices are wrong: 'The principle of substitution, because the subject is valued relative to alternatives' names the principle that justifies the sales comparison approach as a whole, but substitution says a buyer will pay no more than the cost of an equally desirable substitute; it does not tell you how many dollars a single feature is worth. 'The principle of change, because market perception of fireplaces is evolving' would matter if the pairs came from different periods and required a market-conditions adjustment; here the pairs are recent and similar, and change does not govern the size of a feature adjustment. 'The principle of highest and best use, because the fireplace enables a more profitable use' misapplies the concept; a fireplace does not alter the use to which the property is put. Exam tip: Substitution explains why the sales comparison approach works. Contribution explains how big each adjustment inside it should be.