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Real Estate Appraisal-(12)Test 1
12-Highest and Best Use Analysis
13
Real Estate & Planning
Undergraduate 4
10/03/2009

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Cards

Term
Highest and Best Use may be defined as...
Definition
The reasonably probable and legal use of vacant land or an improved property that is phisysically possible, appropriately supported, and financially feasible
Term
In the analysis as though vacant, the appraiser seeks to answer...
Definition
  • Should the land be developed or left vacant?
  • If left vacant, when would future development be financially feasible?
  • If developed, what kind of improvement should be built?
Term
In the analysis as though improved, the appraiser seeks to answer...
Definition
  • Should the existing improvements on the property be maintained in their current state, should they be altered in some manner to make them more valuable, or should they be demolished
  • If renovation or redevelopment is warranted, when should the new improvements be built
Term
If the value of a property as improved is greater than the value of the land as vacant...
Definition
the highest and best use is the use of the property as improved
Term
4 tests of Highest and Best Use
Definition

1a. Legally permissible

1b. Physically Possible

2. Financially feasible

3. Maximally Productive

*as long as you test the first two before the financial test it is fine

Term
If apply the highest and best analysis as vacant, the three possibilities are...
Definition
  1. Continuation
  2. Modification
  3. Demolition and Redevelopment
Term

What may preclude many potential uses when testin the legal permissibility?

Vacant

Definition
  1. Private restrictions
  2. zoning
  3. building codes
  4.  historic district controls
  5. environmental regulations
Term

What affects the use when testing the phisical possibility?

Vacant

Definition
  • size
  • shape
  • terrain
  • accesibility
  • risk of natural disasters
Term

What constitutes whether it is financially feasible?

Vacant

Definition
as long as a potential use has value commensurate with its cost and conforms to the first two tests
Term

The conclusion of highest and best use should be clearly stated in terms of...

Vacant

Definition
  1. Use
  2. Timing
  3. Market Participants
    1. Users
    2. Most probable buyers/tenants
Term

What are the three possibilities that must be considered.

Improved

Definition
  1. Demoliksh and redevelop
  2. Continue
  3. Modify
Term
When would you analyze highest and best use as improved, but the land is vacant?
Definition
  1. Subject to the hypothetical condition
  2. Subject to the extraoridanry assumption
Term
Principal of Consistent Use
Definition
land cannot be valued based on one use while improvements are valued based on another
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