Two adjoining lots are each worth $100,000 separately. Combined under one owner they permit a larger building, and the assembled site is worth $260,000. What is the plottage increment?
Correct Answer
A) $60,000
Plottage combines sites under one ownership into a site with greater utility and value than the parcels separately: $260,000 − ($100,000 + $100,000) = $60,000.
Why This Is the Correct Answer
Option A is correct because the two lots are worth $100,000 + $100,000 = $200,000 separately, and the assembled site is worth $260,000. The plottage increment is $260,000 − $200,000 = $60,000.
Why the Other Options Are Wrong
Option B: $160,000
Option B, $160,000, subtracts only one lot: $260,000 − $100,000. Both lots' separate values must be deducted, giving $60,000.
Option C: $260,000
Option C, $260,000, is the total value of the assembled site, not the increment. The increment is $260,000 − $200,000 = $60,000.
Option D: $30,000
Option D, $30,000, is the increment split per lot: $60,000 ÷ 2. The question asks for the total plottage increment, which is $60,000.
Plottage is the plus
Plottage is the plus you get when the whole is worth more than the sum of its parts. Subtract the separate values from the combined value.
How to use: Use this to compute plottage: combined value minus the total of separate values.
Exam Tip
Assemblage is the process; plottage is the value increment. Read whether the question asks for the total, the increment, or a per-lot figure.
Common Mistakes to Avoid
- -Deducting only one lot's value
- -Reporting the total assembled value as the increment
- -Confusing assemblage with plottage
Concept Deep Dive
Analysis
This question tests the definition and measurement of plottage. Plottage is the extra value created when combined sites have greater utility than the parcels separately. It is measured as the assembled value minus the sum of the separate values.
Background Knowledge
Assemblage is the act of combining parcels; plottage is the resulting increase in value from greater utility. Plottage occurs only when the combined site supports a more productive use than the parcels individually.
Real-World Application
A builder buys two adjoining small lots that are each too narrow for a house under the setback rules. Combined, they permit a larger home, and the appraiser measures the plottage as the assembled value minus the separate lot values.
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An improved property sold for a cash-equivalent $465,000. The supported depreciated contribution of its improvements is $340,000. Using extraction, with no other components or adjustments, what land value is indicated?
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An improved comparable sold for a cash-equivalent $980,000. Market allocation evidence supports a typical land-to-total-price ratio of 26% for competitive properties (standard appraisal guidance allocation method). What indicated land (site) value results from applying that allocation ratio to the comparable’s sale price?