highest and best use real estate meaning

Highest and best use requires that the appraisal considers not just the current use of the property but also the potential value associated with alternative uses. As an example you might offer 285000 for a house.

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Highest and Best Use is the reasonable probable and legal use of vacant land or an improved property.

. In real estate appraisals the use of a property that leads to its highest possible value. The Appraisal Institute defines highest and best use as follows. Dont be concerned if you see this.

The reasonably probable and legal use of vacant land or an improved property that is physically possible appropriately supported financially feasible and that results in the highest value. Heres a breakdown of the four criteria that Highest and Best Use must meet. Highest and best use often is identified as the key concept supporting real estate use and value decisions.

The highest and best use may not be the current use of a property. The reasonable probable and legal use of vacant land or an improved property which is physically possible appropriately supported financially feasible and that results in the highest value. Highest and best use Real Estate Definition Highest and best use The possible use of land that will produce the greatest net income and thus develop the highest land value.

This may be different from the current use of the land and can consider factors like community development goals and financial feasibility. In commercial real estate the phrase refers to a property that represents its most profitable and feasible use. The highest and best use must be legal physically possible financially feasible and maximally productive.

Highest and best use is an important concept in real estate referring to the most valuable use of a property or parcel of land. The highest and best use is determined by a licensed real estate appraiser whether for vacant land or improved property. The highest and best use of a property is the use of a property that would create the greatest net return over time.

Sometimes highest and best use is referred to on the real estate exam as the greatest net return. Highest and Best Use. Determining the highest and best use requires careful evaluation of a propertys potential.

A property must be appraised in terms of its highest and best use. In other words the highest and best use of a piece of land right in the middle of downtown is probably a high rise office tower since that option provides the greatest NPV. The reasonable probable and legal use of vacant land or an improved property which is physically possible appropriately supported financially feasible and that results in the highest value.

Highest and best use is based on the use that is going to bring the highest value for real estate. Its actual current use is not relevant to the highest and best use. Highest and best use and greatest net return can be used interchangeably.

The concept of highest and best use is one of the fundamental principles that underlie real estate appraisal. Name Phone Email I agree to receive FREE real estate advice. Highest and best use is an important consideration of the appraisal process for a property.

The definition of highest and best use is as follows. Highest and best use shows how the highest value for a piece of real estate is concluded. A property must be appraised in terms of its highest and best use.

Highest and Best Use. This term refers to the best possible use of a property based on current market conditions. You must consider the size shape topography and accessibility of the site when determining if it is physically possible.

The definition of highest and best use is as follows. Highest and Best Use is the likely use selected from a number of available choices to which an area of land or a building may be put based on what is physically possible and in compliance with zoning and building regulations and which at the time of an appraisal produces the most profitable present value of the land. Previous Next More Real Estate Definitons.

Definition of Highest and best use George Jarrous Real Estate Agent Century 21 Curran Oberski Use of a parcel of land that will produce the greatest current value. In such cases one may be able to buy the property for less than its ideal value. Buy Sell Rent Where.

Dictionary of Real Estate Terms. This would be done by conducting a site analysis. An escalation clause offers to go above the highest bid by a certain dollar amount up to a specified maximum price.

Definition 1 The first definition of highest and best use is that it is the use for a piece of land or property in general that maximizes your net present value NPV. Need help from a real estate agent. A highest and best use offer is an important part of the real estate process.

Highest and best use highest and best use an appraisal term meaning the legally financially and physically possible use that at the time of appraisal is most likely to produce the greatest net return to the land andor buildings over a given period. The conclusion of a highest and best use study could very well be that the highest and best use of the property is to change the propertys current. And your escalation clause might state that if there is a bid higher than yours youll increase your bid in increments of 2000 above the highest bid up to 305000.

Est and best use is to be considered in valuing real property13 Highest and best use and market value are tied to use since value is created through the use of the property.

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