When two lots, each valued at $50,000, are combined to form a single property valued at $125,000, what is this added value called?

The added value resulting from combining two separate lots into a single property is referred to as plottage. This concept arises from the principle that the value of a larger parcel of land can exceed the sum of the individual values of the smaller parcels, primarily due to increased usability, better design options, and the potential for more intensive development.

In the scenario given, where two lots valued at $50,000 each are combined to form a property worth $125,000, the difference in value—an increase of $25,000—represents the plottage. This value is generated not just by the physical consolidation of the properties but also by the synergies that come from having a larger and potentially more desirable parcel of land.

Understanding this concept is important in real estate as it highlights how land development strategies can create enhanced value through consolidation, thereby influencing investment decisions and development plans. The other terms presented do not accurately describe this unique situation: conversion value is frequently related to the transformation of property use, aggregation value doesn’t specifically refer to this value increase, and appreciation pertains to the increase in value of property over time without necessarily considering the effects of combining properties.