highest and best use analysis
To assess the highest and best use value analysis for a property requires extensive knowledge of the market area potential market growth zoning. HIGHEST AND BEST USE ANALYSIS AND LAND VALUE OPTIMIATION STUDIES DELTA ASSOCIATES P.
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After the analysis the appraiser determines that the current or planned use of the property is indeed physically possible legally permissible financially feasible and maximally productive.
. The sales comparison approach Sales comparisons or comps are similar properties in the same area that have recently been sold. Identifying the highest and best use of a specific property often involves market research and analysis. 1010 WASHINGTON DC 20006 WWWDELTAASSOCIATESCOM INFODELTAASSOCIATESCOM MARTENS VOLVO PROPERTY WASHINGTON DC An auto dealership in a desirable.
The first two tests are interchangeable in order and in many circumstances the last two are combined. The concept of highest and best use was popularized by economists Irving Fisher. Paying a little more attention to HBU will better our profession as a whole and help members prepare improved reports.
The existing use will. As standard 1-3 b in uspap exhorts us to develop an opinion of highest and best use of the real estate when a market value opinion is developed page u-19 2014-2015 uspap and standard 2-2 a x states specifically when an opinion of highest and best use was developed by the appraiser summarize the support and rationale for that opinion. So the highest and best use of a parcel is not determined through subjective analysis by the property owner the developer or the appraiser.
Where several options are available for the usage of development ie. Highest and Best Use Example. Highest and Best Use Example.
Appraisers must analyze the relevant legal physical and economic factors needed to support our conclusions for highest and best use. Rather it is shaped by competitive forces in the subject market. In this post on highest and best use analysis we will focus only on real estate although this concept can be applied many other assets.
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. Hotels serviced apartments residential apartments office space retail etc the initial phase of the Highest and Best-Use study involves consideration of several market sectors and how all the different options are likely to fare based on current and future factors. 2027783101 1717 K STREET NW STE.
Appraisers use three different approaches to determine a propertys highest and best use. Comparing properties with superior a discounted cash. In this scenario the property is not at its highest and best use even though it.
According to The Uniform Standards of Professional Appraisal Practice 2002 highest and best use is defined as The reasonably probable and legal use of property that is physically possible appropriately supported and financially feasible and that results in the highest value. Highest and Best Use Analysis STUDY Flashcards Learn Write Spell Test PLAY Match Gravity Market Analysis Click card to see definition -begins the process of narrowing the focus of the anlaysis from a broader macroeconomic view to data that is pertinent to the subject property Click again to see term 117 Previous Next Flip Space. But it is.
This is the best outcome. Highest and Best Use. The four tests of highest and best use are.
The four criteria the highest and best use must meet are legal permissibility physical possibility financial feasibility and maximum productivity. Alternatively the probable use of land or improved property specific with respect to the user and timing of the use that is adequately supported and results in the highest present value. Highest and best use of the real estate and that STANDARDS RULE 2-2 ax states when an opinion of highest and best use was developed by the appraiser summarize the support and rationale for that opinion Failure to summarize the highest and best use analysis is also high on the hit parade for FNMA FHLMC and HUD.
Alternatively the probable use of land or improved property specific with respect to the user and timing of the use that is adequately supported and results in the highest present value. To let clients and users of the appraisal report know that it complies with this USPAP requirement the appraiser must summarize their highest and best use analysis within the report Standards Rule 2-2 a x. By looking at what these properties sold for you get a rough estimate of your propertys worth.
Highest and best use analysis all four tests of highest and best use must be addressed in the analysis of highest and best use as improved. We all know that highest and best use HBU analysis is the foundation of any market value estimate and has an important and practical application within our Standards rules. The four criteria the highest and best use must meet are legal permissibility physical possibility financial feasibility and maximum productivity.
1 legally permissible 2 physically possible 3 financially feasible and 4 most profitable. Highest and best use analysis produces the highest value for a property based on the concept of maximum productivity.
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