HIGHEST AND BEST USE

THE REASONABLE PROBABLE AND LEGAL USE OF VACANT LAND OR IMPROVED PROPERTY, WHICH IS PHYSICALLY POSSIBLE, APPROPRIATELY SUPPORTED, FINANCIALLY FEASIBLE, AND THAT RESULTS IN THE HIGHEST VALUE.

LAND OR SITE AS THOUGH VACANT PROPERTY AS IMPROVED

HIGHEST AND BEST USE AS THOUGH VACANT ASSUMES THAT A PARCEL OF LAND IS VACANT OR CAN BE MADE VACANT BY DEMOLISHING ANY IMPROVEMENTS.

LAND AS THOUGH VACANT IS A FUNDAMENTAL CONCEPT OF VALUATION THEORY AND IS THE BASIS OF THE COST APPROACH TO VALUE.

QUESTIONS TO BE ANSWERED:

1) IF THE LAND IS , OR WERE, VACANT, WHAT USE SHOULD BE MADE OF IT?

2) WHAT TYPE OF BUILDING OR OTHER IMPROVEMENT, IF ANY, SHOULD BE CONSTRUCTED ON THE LAND AND WHEN?

HIGHEST AND BEST USE OF A PROPERTY AS IMPROVED PERTAINS TO THE USE THAT SHOULD BE MADE ON AN IMPROVED PROPERTY IN LIGHT OF ITS IMPROVEMENTS.

CRITERIA IN HIGHEST AND BEST USE ANALYSIS

LEGALLY PERMISSIBLE:

MUST CONFORM WITH ZONING, BUILDING CODES, ENVIRONMENTAL REGULATIONS, ETC.

PHYSICALLY POSSIBLE:

RELATES TO THE SIZE, SHAPE, AREA, TERRAIN, AND ACCESSIBILITY OF THE LAND.

FINANCIALLY FEASIBLE:ALL USES THAT CAN BE EXPECTED TO YIELD A POSITIVE RETURN ARE FINANCIALLY FEASIBLE. THE NET RETURN IS AFTER ALLOWANCE FOR A REQUIRED RATE OF RETURN ON THE INVESTED CAPITAL.

MAXIMALLY PRODUCTIVE:OF THE FINANCIALLY FEASIBLE USES, THE ONE THAT PRODUCES THE HIGHEST RESIDUAL LAND VALUE CONSISTENT WITH THE RATE OF RETURN WARRANTED BY THE MARKET FOR THAT USE IS THE HIGHEST AND BEST USE.

IMPORTANT POINTS IN DETERMINING HIGHEST AND BEST USE

SURROUNDING LAND USES ARE NOT ALWAYS INDICATIVE OF OPTIMUM USE.

THE EXISTING USE MAY NOT BE OPTIMUM. CURRENT ZONING MAY NOT BE CONSISTENT

WITH A PROPERTY’S HIGHEST AND BEST USE. LEGAL NON-CONFORMING USE - USE THAT IS LAWFULLY ESTABLISHED, BUT NO LONGER CONFORMS TO THE USE REGULATIONS OF THE ZONE.

IS AGRICULTURAL USE A LONG-TERM OR INTERIM USE.

LAND OR SITE VALUATION

THE APPRAISAL OF LAND FOCUSES ON VALUING THE PROPERTY RIGHTS ATTACHED TO THE LAND.

THE APPRAISER SHOULD CONSULT PUBLIC RECORDS TO IDENTIFY ANY EASEMENTS, RIGHTS-OF-WAY, AND PRIVATE OR PUBLIC RESTRICTIONS THAT AFFECT THE SUBJECT PROPERTY.

PHYSICAL CHARACTERISTICS THAT MUST BE CONSIDERED ARE: SIZE FRONTAGE TOPOGRAPHY LOCATION VIEW AVAILABILITY OF UTILITIES

FOR AGRICULTURAL PROPERTIES: SOIL - PRODUCTIVITY WATER - IRRIGATION, STOCK WATER TOPOGRAPHY - SLOPE