Definition: The principle that additional investment in a property can initially add more value than its cost, but beyond a point adds less value than it costs.
Example
A needed bathroom renovation may add substantial appeal, while progressively more expensive luxury finishes produce smaller additional value gains.
Keep the distinction clear
Cost and value are not interchangeable. The market's response, rather than the owner's spending alone, determines an improvement's contribution.
Related terms
Cost · Overimprovement · Market Value
Keep studying
References: California DRE: appraisal and valuation
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