principle of balance

balance, principle of

In appraisal, the concept that there is an ideal balance of factors for the development of real estate,such as will produce the greatest value.

Example: A 10-acre parcel may be capable of being divided into a community of small gar- den homes with a profit margin of $10,000 each, but the legal fees and time spent for zoning changes and the costs of street and other infrastructure improvements may decrease the total project profitability to $250,000, thus affecting the value of the land. The developer may be able to build three luxury homes, instead, for a total profit of $500,000.