Four parcels assembled under single ownership (standard appraisal guidance assemblage) support separate as-is values of $220,000, $310,000, $195,000, and $175,000. After assemblage for a higher-utility use, the combined site is valued at $1,080,000. Assemblage costs (legal, demolition, holding, and related) total $95,000. What is the indicated net plottage value (gross plottage − assemblage costs)?
Correct Answer
A) $85,000
Separate total = $220,000 + $310,000 + $195,000 + $175,000 = $900,000; gross increment = $1,080,000 − $900,000 = $180,000; net increment = $180,000 − $95,000 = $85,000. The indicated result is $85,000. Common errors: not deducting the assemblage costs gives $180,000; deducting the costs from the assembled value instead of from the increment gives $985,000; adding the assemblage costs instead of deducting them gives $275,000.
Why This Is the Correct Answer
Option A is correct because the separate values total $220,000 + $310,000 + $195,000 + $175,000 = $900,000, the gross increment is $1,080,000 − $900,000 = $180,000, and the net plottage after $95,000 of assemblage costs is $180,000 − $95,000 = $85,000.
Why the Other Options Are Wrong
Option B: $180,000
Option B, $180,000, is wrong because it is the gross increment ($1,080,000 − $900,000) before deducting the $95,000 assemblage costs. Net plottage is $180,000 − $95,000 = $85,000.
Option C: $275,000
Option C, $275,000, is wrong because it adds the assemblage costs instead of deducting them ($1,080,000 − $900,000 + $95,000). The correct figure is $180,000 − $95,000 = $85,000.
Option D: $985,000
Option D, $985,000, is wrong because it deducts the costs from the assembled value ($1,080,000 − $95,000) instead of from the increment. Net plottage is $1,080,000 − $900,000 − $95,000 = $85,000.
Gain minus the cost
Plottage is the gain from combining parcels; net plottage is that gain after paying what it cost to combine them.
How to use: Use this phrase to keep the cost deduction attached to the gain, not to the total value.
Exam Tip
Add the separate values carefully first; an arithmetic slip in the sum carries into the later steps.
Common Mistakes to Avoid
- -Stopping at gross plottage when net is requested
- -Subtracting costs from the assembled value rather than the increment
- -Mis-adding the separate parcel values
Concept Deep Dive
Analysis
This question tests net plottage when four parcels are assembled. The appraiser sums the separate values, subtracts that sum from the assembled value to get the gross increment, and then deducts the assemblage costs from the increment.
Background Knowledge
Plottage is the added value created when sites are assembled under single ownership and gain greater utility. Because assembling sites requires spending on legal work, demolition, holding and similar items, the net plottage is the gross increment less those costs.
Real-World Application
An investor buys four small commercial lots to create a site large enough for a grocery-anchored center. The appraiser shows the gross value gain from assembly and then deducts acquisition legal fees, demolition and carrying costs to report the net gain.
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