SAEE - Highest and Best Use Analysis Questions and Answers Flashcards

A property subject to a deed restriction limiting use to single-family residential cannot qualify as HBU for commercial development even if the market strongly supports commercial use. This illustrates which HBU test?

Answer: Legally permissible

Deed restrictions are private legal limitations that must be considered in the legally permissible test, eliminating uses that violate them even if commercially attractive.

When multiple uses each pass all four HBU tests, the final step is to select the use that:

Answer: Produces the highest present value of the land

Among all feasible uses, the one that produces the highest residual land value is selected as the maximally productive and therefore highest and best use.

An appraiser finds that a site's soil conditions cannot support a multi-story structure due to poor load-bearing capacity. This finding eliminates which category of uses from HBU consideration?

Answer: Uses requiring deep foundation systems at prohibitive cost

Poor soil bearing capacity makes high-rise or heavy foundation structures physically impractical or cost-prohibitive, eliminating them from the physically possible test.

Excess land in HBU analysis refers to:

Answer: Land that can be separated from the main parcel and sold or developed independently

Excess land is the portion of a site beyond what is needed for the existing or HBU improvement, and it has separate value because it can be sold or developed independently.

In the context of HBU, 'plottage' refers to:

Answer: The incremental value created when two or more parcels are combined into one larger parcel

Plottage is the added value resulting from assemblage—combining parcels creates greater utility or development potential than the sum of the individual parcels' values.

Which scenario would most likely result in a highest and best use conclusion of 'demolition and redevelopment'?

Answer: The land value as if vacant exceeds the value of the property as improved

When land value as vacant exceeds the value of the property with improvements, the improvements actually detract from value and demolition is the HBU conclusion.

The concept of 'reasonable probability' in HBU analysis means that:

Answer: A proposed alternative use must have a realistic chance of occurring based on market evidence, not just theoretical possibility

Reasonable probability requires that an alternative use be supported by actual market evidence and realistic prospects, not just theoretical or speculative possibility.