What determines highest and best use?

The definition of highest and best use is as follows: The reasonable, probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.

What is the purpose of analyzing the highest and best use of a property as though vacant and of the property as improved?

Highest and best use of property as improved The first is to identify the property use that can be expected to produce the highest overall return for each dollar of capital invested. The second reason to estimate the highest and best use of property as improved is to help identify comparable properties.

Can a property have more than one highest and best use?

When a vacant lot doesn’t have any pre-existing improvements on it, there can be many potential uses for the property (depending on how the owner wants to use it, and what the local zoning regulations will allow), but even when there are several possibilities, there is only ONE highest and best use.

What is the principle behind highest and best use quizlet?

The highest and best use is a recognized theory used in conjunction with the appraisal process. This theory is founded in the correlation between the highest probable value of the property and its highest and best use to attain the highest return on the owner’s original investment.

What is the first test of highest and best use?

The four tests of highest and best use are: (1) legally permissible (2) physically possible (3) financially feasible and (4) most profitable. The first two tests are interchangeable in order and, in many circumstances, the last two are combined.

Why is highest and best use important?

Most appraisers agree that the highest and best use analysis is an integral component of their toolkit. This analysis allows appraisers to understand what form of development will be most profitable at the site and even accounts for adaptations within legal limitations.

What is the number one rule of adjusting comparables?

1. Multiply the value of the comparable by the percentage amount to get the amount of the adjustment. 2. Then add or subtract this amount from the comparable’s value, depending on the relationship between the two properties.

What are the two values considered during a highest and best use Habu analysis?

HABU is the reasonably probably and legal use of vacant land or an improved that is legally permissible, physically possible, financially feasible and maximally productive, and that results in the highest value.

What is highest and best in real estate?

Why do Realtors say “highest and best?” “Highest and best” means that the seller has multiple offers and doesn’t wish to negotiate. Instead, they want to get final offers from each buyer, with their highest offer and best terms, so they can compare and pick one.

What is the first step in determining highest and best use for a property?

The first step in identifying the highest and best use is examining what can be physically done with the property with the existing infrastructure currently in place.

What standards do appraisers follow?

The Uniform Standards of Professional Appraisal Practice (USPAP) is the generally recognized ethical and performance standards for the appraisal profession in the United States.

Which two factors are most critical when choosing comparables?

Which two factors are most critical when choosing comparables? are warranties.

Which is the best definition of highest and best use?

Definitions of highest and best use. The Appraisal Institute defines highest and best use as follows: The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value.

What are the four criteria for land use?

The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of land or improved property – specific with respect to the user and timing of the use – that is adequately supported and results in the highest present value.”.

What makes a property the highest and best use?

The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of land or improved property – specific with respect to the user and timing of the use – that is adequately supported and results in the highest present value.

Which is the highest and Best Use Analysis?

Highest and best use analysis produces the highest value for a property based on the concept of maximum productivity. The concept of highest and best use was popularized by economists Irving Fisher.