RockSpringCluB-Hendricks Appraisal.pdf

HIGHEST AND BEST USE Highest and best use is defined as the reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. Source: The Appraisal of Real Estate - Tenth (10th) Edition - 1992. Published by The Appraisal institute. The definition applies specifically to the highest and best use of the land. It is to be recognized that in cases where a site has existing improvements on it, the highest and best use may very well be determined to be different from the existing use. The existing use will continue, however, unless and until land value in the highest and best use exceeds the total value of the property in its existing use. Implied within these definitions is recognition of the contribution of that specific use of community environment or to community development goals in addition to wealth maximization of individual property owners. Also implied is the determination of highest and best use results from the appraisers’ judgment and analytical skill, i.e., that the use determined from analysis represents an opinion not a fact to be found. In appraisal practice the concept of highest and best use represents the premise upon which value is based. In the context of most probable selling price (market value) another appropriate term to reflect highest and best use would be most probable use. In the context of investment value an alternative term would be most profitable use. Highest and Best Use has also been defined in the Dictionary of Real Estate Appraisal as follows: 1, The reasonably probable use of property that results in the highest value. The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. 2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset's existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (IVS) 3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform

the price that it would be willing to bid. (IVS) 3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions) Source: The Dictionary of Real Estate Appraisal - Sixth (6th) Edition - 2015 Published by the Appraisal Institute. - 57 - REAL ESTATE | | APPRAISALB a & RESEARCH Continued...