California Real Estate SalespersonProperty Valuation and Financial AnalysisMedium
A developer purchases two adjacent vacant lots. Lot 1 is worth $80,000 and Lot 2 is worth $75,000 when valued separately. Once combined into a single larger parcel suitable for a commercial development, the combined parcel appraises for $190,000. What term describes the $35,000 increase in value created by combining the lots?
- APlottage value
- BBetterment value
- CAssemblage
- DExcess land value
Show answer & explanationAnswer & explanation
Correct answer: A. Plottage value
Plottage is the increase in value that results when separate parcels are combined (assembled) into one larger, more useful parcel. Assemblage refers to the act or process of combining the lots, while plottage refers to the resulting value increase: $190,000 − ($80,000 + $75,000) = $35,000.
Why the other options are wrong
- B. Betterment value is not a standard appraisal term for this concept.
- C. Assemblage is the process of combining lots, not the resulting value increase itself.
- D. Excess land value refers to land beyond what is needed for the highest and best use of an improvement.
Plottage Value
The increase in value that results when two or more adjoining parcels are combined into one larger, more valuable parcel.
- Created through assemblage of parcels
- Combined value exceeds sum of separate values
- Common in commercial land development
Memory trick: Plottage is the profit from puzzle pieces joining together.