Property ValuationIntermediateNorth Carolina Exam

Plottage value refers to:

AThe value added when multiple adjacent properties are combined into one larger parcelCorrect

BThe decrease in value due to irregular lot shape

CThe value of a property's location near public transportation, under standard practice

DThe value of mineral rights

Why The value added when multiple adjacent properties are combined into one larger parcel Is Correct

Answer A: The value added when multiple adjacent properties are combined into one larger parcel

Plottage (or assemblage) refers to the increase in value that results from combining several smaller adjacent parcels into one larger parcel. The combined value typically exceeds the sum of the individual 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

Comparable Sales (Comps)

Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.

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.

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