highest and best use real estate meaning

This would be done by conducting a site analysis. Highest And Best Use.

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Sometimes highest and best use is referred to on the real estate exam as the greatest net return.

. The highest and best use of a property is the use of a property that would create the greatest net return over time. Highest and Best Use is the likely use selected from a number of available choices to which an area of land or a building may be put based on what is physically possible and in compliance with zoning and building regulations and which at the time of an appraisal produces the most profitable present value of the land. The four tests of highest and best use are.

Heres a breakdown of the four criteria that Highest and Best Use must meet. Highest and best use often is identified as the key concept supporting real estate use and value decisions. The highest and best use is determined by a licensed real estate appraiser whether for vacant land or improved property.

Highest and Best Use is the reasonable probable and legal use of vacant land or an improved property. Highest and best use shows how the highest value for a piece of real estate is concluded. The possible use of land that will produce the greatest net income and thus develop the highest land value.

The first definition of highest and best use is that it is the use for a piece of land or property in general that maximizes your net present value NPV. This would be done by conducting a site analysis. A property must be appraised in terms of its highest and best use.

In commercial real estate the phrase refers to a property that represents its most profitable and feasible use. Definition of Highest and best use. The highest and best use is determined by a licensed real estate appraiser whether for vacant land or improved property.

The land is financially feasible supported and physically possible resulting in the highest and best value. Highest and best use is an important consideration of the appraisal process for a property. Highest and best use is based on the use that is going to bring the highest value for real estate.

This is the legal use and reasonably probable use of a vacant land or improved property. The definition of highest and best use is as follows. Use of a parcel of land that will produce the greatest current value.

Highest and best use. The Appraisal Institute uses this definition for highest and best use. Its actual current use is not relevant to the highest and best use.

In other words the highest and best use of a piece of land right in the middle of downtown is probably a high rise office tower since that option provides the greatest NPV. 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. Highest and best use highest and best use an appraisal term meaning the legally financially and physically possible use that at the time of appraisal is most likely to produce the greatest net return to the land andor buildings over a.

Definition of Highest and Best Use in Real Estate. 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. This is the legal use and reasonably probable use of a vacant land or improved property.

Dictionary of Real Estate Terms. 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. What Does Highest and Best Use Mean.

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