highest and best use of a property is that use which

MCQs Papers Definitions Flashcards. The principle of highest and best use is one of the many appraisal principles appraisers use to determine fair market value for a property.

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Fannie Mae will only purchase or securitize a mortgage that represents the highest and best use of the site as improved.

. The highest and best use analysis concept is a form of real estate appraisal that considers not only the best use of the property but any potential use or gains that may come from future ventures. Using the highest and best use principle geographic location comparable properties real estate market trends and more appraisers can accurately determine a fair price for properties. This is known as being grandfathered in.

This is particularly true in the context of appraising an industrial property. 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. Not all analyses of highest and best use are so simple and obvious.

Terms in this set 32 the highest and best use of a property must be one that is. Highest and Best Use is a term used in accounting and finance. Legal permissibility physical possibility financial.

Definition of Highest and Best Use in Real Estate. The four characteristics of the highest and best use of property are legally possible maximally productive economically feasible and Learn Accounting. Properties with a use that existed prior to current zoning laws or other regulations could be legally nonconforming.

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 12342. The vacant property is valued at 150000. The appraiser determines highest and best use of a site as the reasonable.

The premise of this article is definitions do not determine highest and best use. Builders often change the highest and best use of properties during their development process through the same mentioned planning or. In some situations its easy for a professional.

Highest and best use is generally defined as the use of land or property that produces the highest value. Which of the following results is NOT an implication of the smoothing of real estate returns due to the use of appraisals. 1 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.

Highest and best use of a property is an economic concept that measures the interaction of four criteria. The four criteria the highest and best use must meet are legal permissibility physical possibility financial feasibility and maximum productivity. According to the Appraisal Institute the definition for highest and best use is the reasonably probable and legal use of vacant land or.

The use must be consistent with the site characteristics and physical features of the property. On the supply side existing buildings wear out or. And while it may be that the highest and best use of a particular parcel of law is its.

When analyzing vacant land the amount of. When Should You Determine Highest and Best Use of a Property. Converting the property into office space results in a value of 1485848.

Highest and best use analysis therefore concludes that the best use of the property is as office space. 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. Because the highest and best use of the property was redevelopment as a commercial site the value for the land taken as right of way was worth more than the residential value of the entire previously undivided property.

The determination of this value is vital for analysing and assessing the value of a property. The highest and best use of a property must be one that is. Determining the highest and best use of a property is a.

When a property falls within a restricted area like one with low density residential zoning and changes occur that free a property for a higher intensity use a change in the highest and best use can also occur. The use must comply with laws regulations and ordinances. According to The Appraisal Institute the highest and best use of a property is defined as.

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 would be as a commercial building. To do this they must undertake market analysis to determine the highest and best use of the property. Highest and best use is used to define the standard for the real property disre-garding any personal intangible property that may affect the value of the property but not the high-est and best use of the property.

The Appraisal Institute defined a set of tests known as The Four Tests which comprise the. The use must add more value than it costs to implement. Highest and Best Use.

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. The use must comply with laws regulations and ordinances. This newsletter began by quoting a line out of USPAP that states.

If the current improvements clearly do not represent the highest and best use of the site as an improved site it must be indicated on the appraisal report. The four tests of highest and best use are. Continuing to use the property for retail space yields an estimated value of 1402222.

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