Contributory Value

AAA

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.

BREAKING DOWN '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.

RELATED TERMS
  1. Real Estate

    Land plus anything on it, including buildings and natural resources.
  2. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  3. Condominium

    A large property complex that is divided into individual units ...
  4. Flipping

    A type of real estate investment strategy in which an investor ...
  5. Appraiser

    A practitioner who has the knowledge and expertise necessary ...
  6. Real Estate Investment Trust - ...

    A REIT is a type of security that invests in real estate through ...
Related Articles
  1. Personal Finance

    Making Money In Residential Real Estate

    Even in a down market, local real estate properties have inefficiencies that investors can exploit.
  2. Home & Auto

    Attention Home Buyers! Why You Need A Lawyer

    Property transactions are complex and subject to specific state/local rules. A professional can simplify the process.
  3. Personal Finance

    Real Estate Speculation In College Towns

    Is this an investing option you should consider? Find out here.
  4. Home & Auto

    Investing In Foreclosures Not A Get-Rich-Quick Venture

    Investing in this kind of real estate takes capital, time and careful planning.
  5. Home & Auto

    Finding A Good Real Estate Agent

    Don't go it alone in the real estate market. We'll show you how to find the help you need.
  6. Investing

    Why You Should Buy In Gentrifying Neighborhoods 

    Living in a gentrifying area has many benefits, not least of which is a property's investment potential.
  7. Mutual Funds & ETFs

    ETF Analysis: SPDR Dow Jones International RelEst

    Learn how the SPDR Dow Jones International Real Estate exchange-traded fund (ETF) is managed and for whom the ETF is most appropriate.
  8. Fundamental Analysis

    Calculating Return on Net Assets

    Return on net assets measures a company’s financial performance.
  9. Professionals

    Don't Let Your Portfolio Be Trump'd by Illiquidity

    A look at Donald Trump's statement of finances and the biggest lesson every investor can learn.
  10. Investing Basics

    Find Income-Generating Properties Online

    Discover the best websites for finding valuable properties that can earn you income.
RELATED FAQS
  1. How is market value determined in the real estate market?

    Anyone who has ever tried to purchase or sell a home has probably heard a lot about the property's fair market value, or ... Read Full Answer >>
  2. What is the difference between adjusted and regular funds from operations?

    While regular funds from operations measures the cash flow generated by the operations of a real estate investment trust ... Read Full Answer >>
  3. What are examples of typical leasehold improvements?

    Typical leasehold improvements include partitioning a large, open space into smaller, more structured areas such as dressing ... Read Full Answer >>
  4. How much of the global economy is comprised of the real estate sector?

    The commercial and residential real estate industry generated an estimated $3 trillion in 2014, with some 35% of sector revenue ... Read Full Answer >>
  5. What is the process for a building owner depreciating leasehold improvements in a ...

    As long as the building owner is the person or entity that provides leasehold improvements, then the owner can depreciate ... Read Full Answer >>
  6. How can I invest in tax liens?

    An individual can invest in tax liens by identifying available liens and then participating in auctions where property tax ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Recession

    A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, ...
  2. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  3. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  4. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  5. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  6. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!