highest and best use real estate example
In some cases marketmarketability data may require a more specific. As an example you might offer 285000 for a house.
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That reasonable and probable use that supports the.
. The four criteria the highest and best use must meet are legal permissibility physical possibility financial feasibility and maximum productivity. For example a parcel of land zoned for residential use cannot be used for commercial purposes. HIGHEST AND BEST USE EXAMPLE Highest and best use is defined by Real Estate Appraisal Terminology as follows.
It is zoned multi-family residential and there have been several sales of 8-10 unit apartment buildings averaging. A propertys highest and best use may be different than its current use. Physically Possible Legally Permissible Financially Feasible Maximally Productive.
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. The highest and best use of the site is to demolish the house and sell the site as a commercial lot. The four tests of highest and best use are.
1 legally permissible 2 physically possible 3 financially feasible and 4 most profitable. Highest and best use is not always the most profitable use of a property. The method is based on the notion that the best use of the property is.
An escalation clause offers to go above the highest bid by a certain dollar amount up to a specified maximum price. The first two tests are interchangeable in order. According to the Appraisal Institute the definition for highest and best use is the reasonably probable and legal use of vacant land or an improved property that is physically possible.
Once the highest and best use has been determined the. Legal permissibility physical possibility financial feasibility maximum productivity We will briefly touch the. Continuing to use the.
A use must meet four criteria as follows. The highest and best Use HBU in real estate is an important method to determine the best use for a piece of land. When determining what use would constitute the highest and best use the appraiser needs to consider many possible uses of the property.
The vacant property is valued at 150000. Heres a breakdown of the four criteria that Highest and Best Use must. Example Lets say we have a 20 acre vacant parcel of land priced at 500000.
The four criteria the highest and best use must meet are. Alternatively the probable use of land or. For example the highest and best use might be a commercial building or an office building.
Highest and Best Use Example An example of the highest and best use analysis would be if you owned a vacant plot of land in an urban area that was zoned for. Highest and Best Use is the reasonable probable and legal use of vacant land or an improved property. A potential use cannot be considered to be the.
Physically possibleThe property must be able to support the proposed. The market value would be 225000 250000 site value minus 25000 demolition cost. Highest and best use analysis evaluates each potential use of the property and its corresponding value.
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