What is indicated by the principle of Balance in property valuation?

The principle of Balance in property valuation emphasizes that there must be an appropriate relationship between the various elements of property improvements to achieve optimum value. This concept suggests that when a property has a proper balance of improvements—such as the size of the building in relation to the land, the quality of materials used, and the types of amenities provided—the property is more likely to reach its maximum potential value. If improvements are excessively extravagant or insufficient compared to the rest of the property or its surroundings, it can lead to diminished value.

This principle implies that effective property valuation takes into account the synergistic effects of these improvements, ensuring that each component complements the others rather than competing or contradicting their effects. For example, a modest house on a large lot may not achieve the same value as a well-designed house that fits harmoniously with its lot size and the neighborhood's characteristics.