California Real Estate Practice Exam

The potential additional value created by combining two adjacent lots is best described as what?

1. Merger value

2. Plottage

3. Assemblage

4. Bundle value

The correct answer is: Plottage

The potential additional value created by combining two adjacent lots is best described as plottage. This term refers specifically to the increase in value that occurs when two or more parcels of land are combined into a single larger parcel. The concept behind plottage is that the whole is greater than the sum of its parts, with the larger parcel often having a higher total value due to improved usability, enhanced development opportunities, or increased marketability. This differs from assemblage, which is the actual process of acquiring and merging the parcels, while plottage describes the resulting increase in value. Merger value and bundle value are terms that do not specifically address the concept of increased value through the combination of lots in the same way that plottage does. Understanding these distinctions is crucial when analyzing property development and valuing real estate investments.