Highest and Best Use Analysis Flashcards

The plottage value created by assembling adjacent parcels under one ownership is an example of a use being:

Answer: More productive combined than separately

Plottage is the incremental value gained when assembled parcels have a higher combined highest and best use.

Which scenario best illustrates a use failing the physically possible test?

Answer: A high-rise proposed on a tiny lot with unstable soil

Inadequate lot size and poor soil make the proposed structure physically impossible, failing that test.

An appraiser valuing an old farmhouse on land now zoned for retail would likely conclude the highest and best use is:

Answer: Commercial redevelopment of the site

Retail zoning and location usually make commercial redevelopment the maximally productive use.

Which of the following is NOT one of the four tests of highest and best use?

Answer: Aesthetically pleasing

Aesthetics is not a formal test; the four are legal, physical, financial, and maximally productive.

A property generating positive cash flow under its current use but where redevelopment would yield far greater value indicates the current use is:

Answer: An interim use pending redevelopment

When a better use is on the horizon, the income-producing current use serves as an interim use.

Financial feasibility is generally tested by comparing the value created against:

Answer: The cost to create the use

A use is financially feasible when the value it produces exceeds the cost to develop it.

If a site's highest and best use as though vacant differs from its use as improved, the appraiser should:

Answer: Report and reconcile both conclusions

Both highest and best use conclusions are analyzed and reconciled to support the value opinion.