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Assemblage in Real Estate: Definition & Appraisal

Instructor: Tisha Collins Batis

Tisha is a licensed real estate agent in Texas. She holds bachelor's in legal studies and a master's degree in criminal justice.

This lesson will discuss assemblage in real estate. A definition will be provided along with a discussion of how appraisal of property would be conducted. Upon completion, the reader should have a good understanding of this concept in real estate.

What is Assemblage in Real Estate?

Meagan wants to buy some land. She has been interested in a small ranch just outside of her home town for years. Unfortunately, it doesn't have quite as much acreage as she wants. Then she found out the owner is selling the ranch and the 100 acres next to it. The properties have been separate for many years, but a marriage in the families brought the properties together. Now is Meagan's chance. She will have plenty of room to run cattle on the ranch with the extra 100 acres. This is an example of assemblage.

The grass is greener on the other side, especially when you can buy it all.
grass

Definition

When two parcels (or more) of land are combined to be sold as one parcel together, this is assemblage in real estate. Typically, the two parcels, when combined, may bring in a larger price than the properties would if they were sold separately. In Meagan's example, she wouldn't have purchased the ranch by itself. Once the extra 100 acres was offered, her interest in the property grew. Thus, she might be willing to pay more for the land when it's combined than she would if the properties were sold separately.

Appraisal

When dealing with assemblage in real estate, the appraisal process is a little different than normal. Appraisers may be faced with the task of figuring out what a property is worth when it is created from two smaller properties. Clients, like Meagan, may be willing to pay more than the properties were appraised for when separated. What is the property actually worth? The buyer is likely to be willing to pay more until they reach a point where assemblage of the tracts isn't feasible. This is a premium is known as assemblage value. Assemblage value is what appraisers will take into consideration when determining the value of the properties together.

Note: In Meagan's situation, the ranch she was interested in originally wasn't big enough to fit her needs. When the extra 100 acres was added, the parcel as a whole fit her needs. The property became much more interesting to her, as she had the opportunity to work the larger piece of land and make a profit. This makes it worth while for Meagan to pay more for the properties together than their combined individual values. Sometimes, assemblage in real estate will change the whole game.

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