Valuation
Principle of Contribution
A concise definition for the California Real Estate Exam study guide.
Definition
The value of a component is measured by what its presence adds to the whole property value — not by the component's cost. An improvement may cost more than it contributes in value.
Why it matters on the California real estate exam
Know the definition, recognize how the term appears in a fact pattern, and compare it with related concepts before choosing an answer.
Study this topic in context
Read the related chapter for the surrounding concepts, examples, and exam tips.
Chapter 6: Valuation & Appraisal →