Parcel A is worth $280,000 and Parcel B is worth $195,000 as separate units, a total of $475,000. Assembled under one ownership for their highest and best use, the combined site is worth $530,000. Before any costs of assembling the parcels, what is the gross plottage?
Correct Answer
A) $55,000
Separate total = $280,000 + $195,000 = $475,000; gross increment = $530,000 − $475,000 = $55,000. The indicated result is $55,000. Common errors: reporting the assembled value instead of the increment gives $530,000; reporting the sum of the separate values gives $475,000; subtracting only Parcel A gives $250,000.
Why This Is the Correct Answer
Option A is correct because the separate values total $280,000 + $195,000 = $475,000, and the assembled value is $530,000. The gross increment is $530,000 − $475,000 = $55,000.
Why the Other Options Are Wrong
Option B: $250,000
Option B, $250,000, subtracts only Parcel A from the assembled value: $530,000 − $280,000 = $250,000. Gross plottage subtracts both parcels: $530,000 − $475,000 = $55,000.
Option C: $475,000
Option C, $475,000, is the sum of the separate values ($280,000 + $195,000), not the increment. The increment is $530,000 − $475,000 = $55,000.
Option D: $530,000
Option D, $530,000, is the assembled value itself, not the increment created by assembly. The gain is $530,000 − $475,000 = $55,000.
Whole minus the parts
Plottage is the extra value of the whole over the sum of its parts.
How to use: Use this when computing plottage from separate and assembled values.
Exam Tip
Plottage questions often list the assembled value and the parts as distractors; the answer is the difference between them.
Common Mistakes to Avoid
- -Reporting the assembled value as the plottage
- -Subtracting only one parcel's value
- -Deducting transaction costs when gross plottage is asked
Concept Deep Dive
Analysis
This question tests the definition and calculation of gross plottage. Gross plottage is the assembled highest and best use value minus the sum of the separate parcel values. Transaction costs are excluded because the question asks only for the gross increment.
Background Knowledge
Plottage is an increment of value that results when two or more sites are assembled under single ownership, producing greater utility. Gross plottage measures that increment before assembly costs. Net plottage would deduct the costs of achieving the assembly.
Real-World Application
A developer is negotiating for two adjoining parcels that are worth $475,000 together as separate sites. An appraiser estimates that, combined for their highest and best use, the site would be worth $530,000, showing $55,000 of gross plottage before assembly costs.
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