Property ValuationIntermediateArizona Exam

Plottage (assemblage) in real estate refers to:

AThe individual market value of a single parcel of land before any assemblage or combination with adjacent properties changes its value or development potential

BThe increased value created by combining multiple adjacent parcels into a larger, more valuable tractCorrect

CThe formal process of subdividing a large tract of land into smaller individual lots for separate sale or development, which is the opposite of an assemblage

DA specialized survey method used by licensed surveyors to calculate the acreage of irregular-shaped lots that cannot be measured using standard rectangular methods

Why The increased value created by combining multiple adjacent parcels into a larger, more valuable tract Is Correct

Answer B: The increased value created by combining multiple adjacent parcels into a larger, more valuable tract

Plottage is the increase in value resulting from combining (assembling) two or more adjacent parcels into a single, larger parcel. The assembled parcel's value typically exceeds the sum of the individual parcel values.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.

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Key Terms to Know

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Capitalization Rate (Cap Rate)

A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.

Gross Rent Multiplier (GRM)

A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.

Net Operating Income (NOI)

The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.

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