Separate property components have individually supported values totaling $900,000. May the appraiser conclude the assembled whole is worth $900,000 solely by addition?
Correct Answer
A) No; analyze the assemblage, since the whole may differ from the sum
SR 1-4(e) requires analysis of the effect on value, if any, of assemblage and prohibits valuing the whole solely by adding individual estate or component values. The value of the whole may equal, exceed or be less than their sum. A supported assemblage conclusion requires analysis of the relevant market and property interests rather than arithmetic addition alone.
Why This Is the Correct Answer
Option A is correct because SR 1-4(e) requires analysis of the effect on value, if any, of assemblage and tells the appraiser to refrain from valuing the whole only by adding component values. The whole may differ from the $900,000 sum, so the assemblage must be analyzed.
Why the Other Options Are Wrong
Option B: Yes; component values add up directly to the value of the whole
Option B is wrong because component values do not add up directly to the value of the whole. Adding the parts to reach $900,000 without analysis is exactly what SR 1-4(e) prohibits.
Option C: No; assemblage analysis is prohibited in market-value assignments
Option C is wrong because assemblage analysis is not prohibited in market value assignments. SR 1-4(e) requires it when analyzing assembled estates or components.
Option D: Yes; the total that the client requested controls the conclusion
Option D is wrong because the total the client requested does not control the conclusion. Client expectations are not evidence of value.
Whole is not just sum
Two plus two in assemblage may not be four; the market decides what the whole is worth.
How to use: Use this when a question adds component values to reach a total.
Exam Tip
Any answer that adds components to get the whole without analysis conflicts with SR 1-4(e).
Common Mistakes to Avoid
- -Adding component values to get the whole
- -Assuming assemblage raises value in all cases
- -Letting the client's target set the value
Concept Deep Dive
Analysis
This question tests the assemblage rule in SR 1-4(e). The value of a whole can equal, exceed or fall below the sum of its parts, so addition alone cannot set the value of the assembled property.
Background Knowledge
Plottage is the extra value that can result when parcels are combined, but combination does not lift value in every case. The appraiser analyzes market evidence to decide whether the whole is worth more, less or the same as the sum.
Real-World Application
A developer combines three adjacent lots each worth 300,000 dollars into one site that can support a larger building. The appraiser analyzes whether the assembled site sells at a premium rather than just reporting 900,000 dollars.
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