Contributory Value

April  2011 

The market value of a property is the value of the entire property.  It is the value that the entire property would have in one transaction.  However, many things combine to give a property value.  Some of the things that give a single family dwelling property value are the size of the dwelling, the number of bath rooms, a fireplace or a garage as examples.  These things are often referred to as components.  The amount that a component such as a fireplace or a garage contributes to the total value is known as its contributory value.

Estimating a component’s contributory value can be tricky.  An hypothetical example: a single family dwelling in Chittenden County Vermont that is on one acre, 2,900 square feet, three bed rooms, two & a half baths, attached two car garage, built in 1992, very good condition recently sold for $590,000.  If the new owners install a $25,000 in-ground pool, would the market value of the property increase to $615,000?  In Vermont the answer is probably not.  The amount of change in market value due to the pool is the pool’s contributory value.  If the market value goes up by $7,500 then the pool’s contributory value is $7,500 even though it cost $25,000.

Cost and value are not the same things.  One of the typical mistakes some Assessors or Listers make is to estimate the cost of each component of a property and then add them all up to arrive at a total market value.  This would only work if all of the components had contributory values that equaled their cost.