New Jersey Real Estate License Exam Practice Question
Which principle of value should be given the most weight in helping a seller plan property modifications that will deliver the best return on investment?
Correct Answer: B
Rationale: In property valuation, the principle of contribution focuses on how much value a specific modification adds to a property. This principle is crucial for sellers planning renovations, as it emphasizes maximizing return on investment by ensuring that improvements align with buyer preferences and market demand.
Option A, conformity, refers to the idea that properties achieve maximum value when they conform to neighborhood standards, but it does not directly address the impact of specific modifications. Option C, reproduction, relates to the cost of replicating a property, which may not reflect market value. Option D, substitution, involves assessing value based on comparable properties, but it does not guide specific investment decisions as effectively as contribution.
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