California Real Estate Practice Exam

When considering a major home improvement, the homeowner's primary concern about the house's value is based on the principle of:

1. Substitution

2. Contribution

3. Balance

4. Plottage

The correct answer is: Contribution

The correct answer is B Contribution. This principle considers the added value that a specific improvement will bring to the overall value of a home. It is important to note that other options, such as A: Substitution, C: Balance, and D: Plottage, may also impact the value of a home to some extent, but they are not as directly related to a specific improvement as Contribution is. For example, Substitution refers to the concept that a potential buyer may choose to purchase a different property with similar features instead of the one being considered, which can affect the value of the home. Balance refers to the idea that different features in a home should be in proportion to each other, but it does not necessarily consider the value of a specific improvement. Plottage, on the other hand, takes into account the added value that can come from combining adjacent properties, but it is not solely based on a single improvement. Ultimately, Contribution is the most appropriate concept to consider when evaluating the impact of a major home improvement on a home's value.