SAEE SAEE - Highest and Best Use Analysis Questions and Answers 5 — Questions and Answers
Question 1: 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?
- Physically possible
- Financially feasible
- Legally permissible (Correct answer)
- Maximally productive
Correct 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.
Question 2: When multiple uses each pass all four HBU tests, the final step is to select the use that:
- Conforms most closely to surrounding properties
- Has the lowest construction cost
- Produces the highest present value of the land (Correct answer)
- Is most consistent with city planning goals
Correct 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.
Question 3: 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?
- All uses restricted by zoning
- Uses requiring deep foundation systems at prohibitive cost (Correct answer)
- Uses not supported by current market demand
- Uses prohibited by environmental regulations
Correct 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.
Question 4: Excess land in HBU analysis refers to:
- Land that exceeds the minimum lot size for the current zoning
- Land that can be separated from the main parcel and sold or developed independently (Correct answer)
- Land encumbered by an easement limiting its use
- Land with physical characteristics making it unbuildable
Correct 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.
Question 5: In the context of HBU, 'plottage' refers to:
- The zoning classification applied to a parcel
- The incremental value created when two or more parcels are combined into one larger parcel (Correct answer)
- The physical measurement of a site's buildable area
- The income generated by a speculative land holding
Correct 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.
Question 6: Which scenario would most likely result in a highest and best use conclusion of 'demolition and redevelopment'?
- The improvements are new and fully leased at market rent
- The land value as if vacant exceeds the value of the property as improved (Correct answer)
- The property is located in a stable, mature neighborhood
- The existing use is nonconforming but generating above-market income
Correct 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.
Question 7: The concept of 'reasonable probability' in HBU analysis means that:
- The appraiser must use only the most conservative market data available
- A proposed alternative use must have a realistic chance of occurring based on market evidence, not just theoretical possibility (Correct answer)
- All legally permitted uses must be analyzed with equal weight
- The appraiser may only consider uses that have already been approved by regulators
Correct 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.
SAEE SAEE - Highest and Best Use Analysis Questions and Answers 5
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?