highest and best use real estate example
Define and resolve the highest and best use. The Appraisal Institute defines highest and best use as follows.
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. That reasonable and probable use that supports the highest present value as defined as of the effective date of the appraisal. The four criteria the highest and best use must meet are. A prospective use cannot be considered the highest and best use unless that use would be allowed under current building codes zoning ordinances environmental laws and other government regulations.
HIGHEST AND BEST USE EXAMPLE Highest and best use is defined by Real Estate Appraisal Terminology as follows. This term refers to the best possible use of a property based on current market conditions. Ad Let us help maximize your leads increase sales and leverage your resources.
For example if an area is zoned as residential it would be hard for an appraiser to state that the highest and best use of that real estate. A highest and best use offer is an important part of the real estate process. 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.
The first two tests are interchangeable in order and in many circumstances the last two are combined. Steps Three and Four financially feasiblemost profitable cannot be determined until the first two. Alternatively that use from among reasonably probable and legal alternative uses.
When a site contains improvements the highest and best use may be determined to be different. Maximally productive or maximum productivity is the highest and best use. Schedule your no cost no obligation coaching strategy session today.
In real estate highest and best use refers to the reasonable probable and legal use of vacant land or an improved property that is physically possible appropriately supported financially feasible and results in the highest value. Access Top Listing Strategies. State the existing use and the use reflected in the appraisal 6214.
The definition of highest and best use of land as if vacant requires appraisers evaluate the following four criteria. Specifically the appraisal institute describes the highest and best use of a property as the reasonably probable and legal use of vacant land or an improved property that is physically. September 13 2010.
Highest and Best Use or highest or best use HBU is a concept that originated with early economists such as Irving Fisher 1867-1947 who conceptualized the idea of maximum productivity. One of the earliest citations of the term is found in the Minutes of the Maine Legislature as early as 1831 in speaking about the assessment and valuation of real estate. This evaluation takes into consideration factors such as zoning regulations environmental.
Appraisers begin their highest and best use analysis reviewing building codes zoning private restrictions environmental regulations and historic controls. Conceptually highest and best use is a test used by appraisers to determine if a propertys current or intended use finds that productmarket fit. The highest and Best Use of Real Estate As development picks up consider the competitive forces that shape highest and best use.
The four tests of highest and best use are. Highest and Best Use is a fundamental principal of real estate valuation that takes into account the propertys current and alternate uses to determine which will generate the greatest value. 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.
Ad This Success Bundle Includes Listing Dialogues A Marketing Plan A Free Consultation. In order to calculate a homes highest and best offer you need to consider several factors including zoning restrictions the current market value of similar properties and. The reasonably probable and legal use of property that is physically possible appropriately supported and financially feasible and that results in the highest value.
The four criteria the highest and best use must meet are legal permissibility physical possibility financial feasibility and maximum productivity. The definition of highest and best use is as follows. This one is pretty self-explanatory as it circles back to the core principle of highest and best use.
Remember regardless of the use appraisers find whatever has the greatest net return and follows these four questions is the highest and best use. 1 legally permissible 2 physically possible 3 financially feasible and 4 most profitable. 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.
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