Three parcels assembled under single ownership (standard appraisal guidance assemblage / plottage) support separate as-is values of $310,000, $285,000, and $255,000. After assemblage for a higher-utility use, the combined site is valued at $1,000,000. Assemblage costs (legal, demolition, holding, and related) total $70,000. What is the indicated net plottage (gross plottage increment after assemblage costs)?
Correct Answer
A) $80,000
Separate total = $310,000 + $285,000 + $255,000 = $850,000; gross increment = $1,000,000 − $850,000 = $150,000; net increment = $150,000 − $70,000 = $80,000. The indicated result is $80,000. Common errors: not deducting the assemblage costs gives $150,000; deducting the costs from the assembled value instead of from the increment gives $930,000; adding the assemblage costs instead of deducting them gives $220,000.
Why This Is the Correct Answer
Option A is correct because the separate values total $310,000 + $285,000 + $255,000 = $850,000, the gross increment is $1,000,000 − $850,000 = $150,000, and the net increment after $70,000 of assemblage costs is $150,000 − $70,000 = $80,000.
Why the Other Options Are Wrong
Option B: $150,000
Option B, $150,000, is wrong because it is the gross increment ($1,000,000 − $850,000) before deducting the $70,000 assemblage costs. The net plottage is $150,000 − $70,000 = $80,000.
Option C: $220,000
Option C, $220,000, is wrong because it adds the assemblage costs instead of deducting them ($1,000,000 − $850,000 + $70,000). The correct net figure is $150,000 − $70,000 = $80,000.
Option D: $930,000
Option D, $930,000, is wrong because it deducts the costs from the assembled value ($1,000,000 − $70,000) rather than from the increment. The net plottage is $1,000,000 − $850,000 − $70,000 = $80,000.
Sum, subtract, then deduct
Add the parts, subtract the parts from the whole to get the gain, then take the costs out of the gain.
How to use: Use this three-step order on any net plottage problem.
Exam Tip
Watch for whether the question asks for gross or net plottage; net requires deducting assemblage costs from the increment, not from the total.
Common Mistakes to Avoid
- -Reporting gross plottage when net is asked
- -Deducting assemblage costs from the assembled value instead of the increment
- -Adding assemblage costs to the increment
Concept Deep Dive
Analysis
This question tests the calculation of net plottage after assemblage. First sum the separate parcel values, then subtract that sum from the assembled value to find the gross increment, and finally deduct the assemblage costs from the increment.
Background Knowledge
Plottage is the increment of value that results when two or more sites are assembled under single ownership and produce greater utility. Assemblage involves real costs such as legal fees, demolition and holding, so the net benefit of assembly is the gross increment minus those costs.
Real-World Application
A developer acquires three adjoining lots to build a mid-rise project that none could support alone. The appraiser compares the assembled site's value with the sum of the separate values and then deducts legal, demolition and holding costs to show the net gain from assembly.
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