SAEE - Highest and Best Use Analysis Questions and Answers Flashcards
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When analyzing highest and best use for a vacant site, which sequence of tests is applied?
Answer: Legally permissible, physically possible, financially feasible, maximally productive
The four tests are always applied in the order: legally permissible, physically possible, financially feasible, maximally productive.
A property's current use differs from its highest and best use. This is most likely because:
Answer: Market conditions have changed since the improvements were built
When current use diverges from HBU, it is typically because market conditions evolved after the improvements were constructed.
Which term describes a use that satisfies all four HBU tests but generates the greatest net return to the land?
Answer: Maximally productive use
Maximally productive use is the final HBU test, identifying which legally permissible, physically possible, financially feasible use yields the highest land value.
An appraiser determines that a site's HBU is a four-story office building, but a two-story office building currently exists. The site is best described as:
Answer: Under-improved
When existing improvements fall short of the HBU density, the site is under-improved, meaning the land is not being used to its full potential.
In HBU analysis, 'interim use' refers to:
Answer: A temporary use that holds the property until a higher-value use becomes feasible
An interim use is a temporary, transitional use that keeps the property productive until market conditions support its HBU.
Which factor would most directly affect the 'physically possible' test in HBU analysis?
Answer: Soil bearing capacity and site topography
Soil bearing capacity and topography are physical site characteristics that determine what types and sizes of structures can be built.
The principle of consistent use requires that:
Answer: Land and improvements be valued under the same use assumption
Consistent use requires that land and improvements be appraised under the same HBU assumption; you cannot value land as commercial while valuing improvements as residential.