Contributory Value

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Contributory Value

In real estate, a portion of the land or the improvements on it that increases its value. For example, the contributory value of the mother-in-law suite in a back yard may increase the value of a home by $25,000.
References in periodicals archive ?
The resolution of the apparent dilemma requires consideration of the interrelationship between the value of the whole package (based on market rent to the whole) and the contributory values of component parts (including site rent and an allocation for improvement rent).
The value of the total real property is a function of the contributory values of the components.
After deduction of the contributory value of the structures, there would not be any leasehold estate value if the site rent were at the market rent.
Therefore, the contributory value of the leasehold interest in the permitted site comes to $20,500 ($104,000 $83,500), and the total property value is $ 135,500, rounded (120).
Since the all parties involving in common maritime adventure make contributions on pro-rata as per the values at risk, therefore, the "contributory values", need to be determined.
As a result of these dynamics, appraisers and originators are likely to be extremely conservative with contributory values for legal ADUs, to the point where the accuracy of valuations may be compromised.
One benefit of the income capitalization approach is it clearly assigns contributory values to each unit.
For example, one permitted ADU in Portland had estimates of contributory value that ranged from $10,000 to $100,000.
Taken together, these guidelines create a strong suggestion for loan originators and the appraisers that work with them: if an ADU is encountered, it is likely to be illegal, and it may (and perhaps should) be given only insignificant or incidental contributory value. The case of a legal ADU, where an owner can receive market rent and contributory value might be estimated with the income capitalization approach, is barely addressed.
While the guidelines of government-sponsored enterprises might make it simpler to presume that a legal ADU's contributory value is incidental or insignificant, that is not likely to be an accurate assumption.