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 principle of highest and best use in real estate?
Highest and Best Use, Defined
The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value.
What factors should be considered when determining highest and best use?
The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.
What is meant by highest and best use from a real estate development point of view?
It’s the basis of all feasibility studies and it’s called highest and best use. Just like smart businesses try and maximise the return on their assets, so should you as a property investor. And overlooking this principle means you won’t maximise the value of your development and get the highest return on your money.
What does the appraiser hope to establish when determining the highest and best use of property as improved?
For improvements to represent the highest and best use of a site, they must be legally permitted, financially feasible, and physically possible, and must provide more profit than any other use of the site would generate.
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 would be the highest and best use for a vacant property quizlet?
the highest and best use of a property must be one that is: (1) Legally permissible: the use must comply with laws, regulations, and ordinances. (2) Physically possible: the use must be consistent with the site characteristics and physical features of the property.
What is the purpose of analyzing the highest and best use of a property as though vacant and of the property as improved?
An analysis related to the highest and best use as improved is applicable if the property is improved, or slated for new construction. This analysis seeks to identify the highest and best use of the property while taking into account the existing or proposed improvements.
What is the first test of highest and best use?
The first test of highest and best use simply evaluates whether it is possible to use the land in a certain way. Ignoring the zoning and economics of the proposal, consider whether or not the potential use is physically possible.
What is the principle of contribution in real estate?
Contribution – An appraisal principal which holds that the value of real property is greatest when the improvements produce the highest return commensurate with their cost (the investment). Also called the principal of increasing and decreasing returns.
What is the principle of conformity in real estate?
The principle of conformity states that maximum value is realized when a reasonable degree of architectural homogeneity exists and land uses are compatible. This principle implies reasonable similarity, not monotonous uniformity, tends to create and maintain value.
What is a highest and best use study?
1: “That reasonably 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.” 12.34.
Why is highest and best use analysis important in estimating market value?
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 typical result when an improvement does not represent the highest and best use of the land as vacant?
What is the typical result when an improvement does not represent the highest and best use of the land as vacant? Usually, the regulating municipality will permit a non-conforming use to continue, but will limit the owner’s ability to expand the use or to rebuild the structure if it is damaged or destroyed.
Which term best describes a piece of land that is enhanced and ready for a building or structure?
Which term best describes a piece of land that is enhanced and ready for a building or structure? -A site is a piece of land that has been enhanced and is ready for a structure. A borrower agreed to pay three points to the lender.