A developer owns two contiguous vacant lots. Lot 1 has 6,000 square feet and is worth $30 per square foot alone; Lot 2 has 9,000 square feet and is worth $28 per square foot alone. Combined under the developer's single ownership, the 15,000-square-foot site supports a larger building, and the market values it at $34 per square foot. What plottage value results?
Correct Answer
D) $78,000
Plottage value is the increment in value from combining sites under one ownership. The combined site is worth 15,000 x $34 = $510,000, and the lots separately are worth 6,000 x $30 + 9,000 x $28 = $180,000 + $252,000 = $432,000, so plottage value is $78,000. Counting the increment on Lot 2 alone gives $54,000, applying Lot 1's $30 rate to the whole site gives $60,000, and using a simple average rate of $29 gives $75,000.
Why This Is the Correct Answer
Option D is correct because the combined site is worth 15,000 x $34 = $510,000 and the two lots separately are worth $180,000 + $252,000 = $432,000. The difference, $78,000, is the plottage value created by assembling them under one ownership.
Why the Other Options Are Wrong
Option A: $54,000
Option A, $54,000, is 9,000 x ($34 - $28), the gain on Lot 2 alone. Lot 1 also gains 6,000 x ($34 - $30) = $24,000, and the total increment is $78,000.
Option B: $60,000
Option B, $60,000, applies Lot 1's $30 rate to all 15,000 square feet: 15,000 x ($34 - $30). Lot 2 is worth $28, not $30, per square foot alone, so the separate values are understated in the increment.
Option C: $75,000
Option C, $75,000, uses a simple average rate of $29: 15,000 x ($34 - $29). The lots differ in size, so the correct combined separate rate is weighted, $432,000 / 15,000 = $28.80, which gives $78,000.
Whole minus parts equals plottage
Value the assembled site as one, value each lot on its own, and the gap between the whole and the sum of the parts is plottage.
How to use: Use whole-minus-parts on any plottage question, valuing each part with its own size and rate.
Exam Tip
When lots differ in size and unit value, compute each lot's value separately rather than averaging rates.
Common Mistakes to Avoid
- -Averaging unit rates of lots with different sizes
- -Counting the increment on one lot only
- -Calling assemblage and plottage the same thing
Concept Deep Dive
Analysis
The question tests plottage value as an increment: the value of the assembled site minus the sum of the separate values. Because the two lots have different unit values and sizes, the separate values must be computed lot by lot, not with one rate.
Background Knowledge
Plottage is the process of combining two or more sites under a single ownership to create one site with greater utility and value than the parcels separately. The added value is plottage value; assemblage is the act of combining the parcels.
Real-World Application
A developer has bought two adjacent lots and asks an appraiser how much assembly added. Sales show that sites large enough for a mid-rise sell for a higher unit price, so the appraiser values the assembled site and the separate lots and reports the difference as plottage value.
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