A comparable land sale was purchased by an adjoining owner completing an assemblage. How should the appraiser treat it?
Correct Answer
B) Consider whether the price included a plottage premium
Why this is correct: A sale to an adjoining owner for an assemblage may include a 'plottage' or 'assemblage' premium—an extra amount paid because the parcel has special value to that specific buyer for creating a larger, more valuable whole. The appraiser must analyze whether the price reflects this special buyer motivation before using it as a comparable for a typical market value assignment. Why the other choices are wrong: 'Use it directly, as it is a recent arm's length sale' is wrong; it may not reflect typical market value due to the special buyer. 'Exclude every sale involving an adjoining owner' is wrong; such sales can be used with analysis. 'Adjust it upward to reflect the assemblage benefit' is wrong; if a premium is present, you would adjust it downward for a typical sale. Exam tip: Sales for assemblage may reflect 'value in use' to a specific buyer, not general 'market value.' Look for a plottage premium.
Why This Is the Correct Answer
Why this is correct: A sale to an adjoining owner for an assemblage may include a 'plottage' or 'assemblage' premium—an extra amount paid because the parcel has special value to that specific buyer for creating a larger, more valuable whole. The appraiser must analyze whether the price reflects this special buyer motivation before using it as a comparable for a typical market value assignment. Why the other choices are wrong: 'Use it directly, as it is a recent arm's length sale' is wrong; it may not reflect typical market value due to the special buyer. 'Exclude every sale involving an adjoining owner' is wrong; such sales can be used with analysis. 'Adjust it upward to reflect the assemblage benefit' is wrong; if a premium is present, you would adjust it downward for a typical sale. Exam tip: Sales for assemblage may reflect 'value in use' to a specific buyer, not general 'market value.' Look for a plottage premium.
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