Site improvements cost $40,000 to install but add only $25,000 to what buyers will pay. What is the $25,000 called?
Correct Answer
C) The contributory value of the improvements
Why this is correct: Contributory value is the amount a particular component (like a site improvement) adds to the total market value of the property. It is determined by the market, not by cost. Why the other choices are wrong: 'The reproduction cost of the improvements' is the cost to rebuild them new, not their value contribution. 'The entrepreneurial profit on the project' is the developer's reward for risk and effort. 'The accrued depreciation on the site work' is the difference between cost and value; here, the $15,000 gap represents functional obsolescence (superadequacy). Exam tip: Contributory value is a market-derived measure of what a feature adds to value, which is often less than its cost.
Why This Is the Correct Answer
Why this is correct: Contributory value is the amount a particular component (like a site improvement) adds to the total market value of the property. It is determined by the market, not by cost. Why the other choices are wrong: 'The reproduction cost of the improvements' is the cost to rebuild them new, not their value contribution. 'The entrepreneurial profit on the project' is the developer's reward for risk and effort. 'The accrued depreciation on the site work' is the difference between cost and value; here, the $15,000 gap represents functional obsolescence (superadequacy). Exam tip: Contributory value is a market-derived measure of what a feature adds to value, which is often less than its cost.
More Land/Site Questions
Under which condition is the land residual technique most applicable?
Why can the same physical parcel carry different values in two assignments?
In a built-up area where no vacant land has sold for years, which approach to site value is the usual fallback?
How is entrepreneurial profit treated in the subdivision development method?
A land comparable sold 18 months ago in a market rising about 4 percent a year. What adjustment direction applies?
Why does a developer's required profit rise for a longer subdivision project?
How does holding cost enter the valuation of land bought for future development?
Excess land is best described as land that has which characteristic?
Plottage value arises in which of the following situations?
Which of the following is an off-site improvement rather than a site improvement?
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