Which concept refers to a component's value based on its contribution to the overall property value?

The correct concept regarding a component's value based on its contribution to the overall property value is known as Contribution. This principle asserts that the value of any single component of a property is determined by how much that component adds to the overall value of the property. For example, if a property has additional features such as a swimming pool or a renovated kitchen, the contribution of these features is evaluated based on how much they increase the total value of the property compared to similar properties without those features.

The idea of Contribution emphasizes that not all improvements or components will proportionately increase the property value. Some enhancements may yield a greater increase in value than others, reflecting the concept of diminishing returns. This principle is crucial for appraisers when determining how much to factor enhancements into the valuation of real estate.

Conformity relates to the idea that a property is most valuable when it aligns with the characteristics of other properties in the neighborhood but does not specifically address the value contribution of individual components. Surplus Productivity pertains to the economic theory where the earnings from land exceed its costs, and Regression involves a decrease in value due to surrounding properties. Thus, these concepts do not specifically capture the direct contribution of an individual property component to overall value in the same way that Contribution does.