highest and best use real estate example

Get Access To Proven RE Listing Strategies Today. Highest and best use analysis evaluates each potential use of the property and its corresponding value.

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Heres a breakdown of the four criteria that Highest and Best Use must meet.

. The Appraisal Institute defines highest and best use as follows. 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. This term refers to the best possible use of a property based on current market conditions.

As long as the value of a property as improved is greater than the value of the site as if vacant the highest and best use is typically the improved property. In some cases marketmarketability data may require a more specific recommendation. Converting the property into office space results in a value of 1485848.

That reasonable and probable use that supports the highest present value as. The four criteria the highest and best use must meet are. In other words the appraiser might specify a 10-story office building or a 25000-square-foot retail store.

You must consider the size shape topography and accessibility of the site when determining if it is physically possible. Before the development can even be conceptualized you need to ascertain you have the property physically suited to hold the real estate structure you wish to build. List Efficiently Smarter With This Easy-To-Follow Guide.

Download and Print Instantly on Desktop Mobile and Tablets. Lets say you owned a vacant lot in a residential neighborhood. A highest and best use offer is an important part of the real estate process.

Instead building a house would be a safer bet and thus would be the highest and best use. The highest and best use of the site is to demolish the house and sell the site as a commercial lot. The definition of highest and best use is as follows.

Continuing to use the property for retail space yields an estimated value of 1402222. 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. 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.

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. The market value would be 225000 250000 site value minus 25000 demolition cost. State the existing use and the use reflected in the appraisal 6214.

When a site contains improvements the highest and best use may be determined to be different. Developed by Lawyers Customized by You. The four tests of highest and best use are.

Ad Download Your Free List Win Guide. 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. 1 legally permissible 2 physically possible 3 financially feasible and 4 most profitable.

What Is an Example of Highest and Best Use. HIGHEST AND BEST USE EXAMPLE Highest and best use is defined by Real Estate Appraisal Terminology as follows. For example the highest and best use might be a commercial building or an office building.

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 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. Online Home Purchase Contract Templates.

Access Top Listing Strategies. Schedule your no cost no obligation coaching strategy session today. Highest and Best Use of Property as Improved.

The four criteria the highest and best use must meet are legal permissibility physical possibility financial feasibility and maximum productivity. Once the value of the vacant. This evaluation takes into consideration factors such as zoning regulations environmental.

Define and resolve the highest and best use. Highest and Best Use is the reasonable probable and legal use of vacant land or an improved property. If you constructed a parking garage in that residential neighborhood chances are you would not be getting the highest value from that property.

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 possible appropriately supported and financially feasible and that results in the highest value The Four Tests in Highest Best Use Analysis. The first two tests are interchangeable in order and in many circumstances the last two are combined. For example it would be impossible to build a 500 square-foot structure on a 300 square foot lot or a marble or cement building on soft clay soil.

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 vacant property is valued at 150000. Ad Let us help maximize your leads increase sales and leverage your resources.

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