Contributory Value

Definition of 'Contributory Value'


The value contributed by a component or part to the total value of the whole. Contributory value is most commonly used in real estate to refer to the contribution made by a particular feature or component to the value of the whole property. The concept of contributory value comes from the field of value theory.

Investopedia explains 'Contributory Value'


Different features in real estate may have vastly differing contributory values. The contributory value of a backyard deck may be well below that of a secondary suite with a full kitchen. Contributory values may also be dependent on buyer preferences and the state of the economy.

For example, the pool in the backyard may have a contributory value of $10,000 for a family with teenage children, but may have scant contributory value for a family with toddlers. Likewise, enhancements such as granite countertops in the kitchen and state-of-the-art appliances may be a significant contributor to value in a red-hot real estate market, but their contributory value may be diminished in a sluggish housing market.



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