What concept relates to how alterations to a property impact its overall value?

The concept of contribution refers to the idea that the value of a property is influenced by the degree to which specific improvements or alterations enhance its overall worth. Essentially, it highlights that not all changes to a property will yield proportional increases in value; instead, the benefits gained from any alteration or addition must be weighed against the cost incurred. For example, if a homeowner adds a pool, the increase in property value should be compared to the expense of constructing the pool. If the addition of the pool significantly enhances the property's appeal and utility, its contribution may be considered valuable. Thus, the principle of contribution underscores the incremental increase in value based on specific changes, which is pivotal for evaluations and investment decisions in real estate.