Free Pennsylvania Real Estate Practice Exam Practice Question
A licensee is discussing a possible listing with potential sellers. The sellers tell the licensee that they want to spend $9,000 on new carpeting for their home and believe they will recover the full cost of the carpeting. For the same $9,000, the buyers could re-carpet the house to their exact taste. Which of the following concepts is the licensee explaining?
Correct Answer: A
Rationale: In this scenario, the licensee is discussing how the value added by the new carpeting may not equate to the full $9,000 investment. Contributory value refers to the increase in a property's value due to specific improvements. Since buyers may prefer to choose their own carpeting, the sellers might not recover the full cost, demonstrating that the improvement may not contribute significantly to the overall value.
Highest and best use (B) pertains to the most profitable use of a property, which is not the focus here. Market price (C) refers to the actual selling price, which is unrelated to the sellers' expectations. Physical deterioration (D) involves the decline in property value due to wear and tear, which does not apply in this context.
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