An assignment requires separate analyses of a site as though vacant and of the property as improved. Which highest-and-best-use treatment fits that assignment?
Correct Answer
D) Analyze and support both the as-vacant and as-improved premises
Under Standards Rule 1-3, the appraiser analyzes relevant legal, physical, economic and use factors as necessary for credible results. When the assignment requires both an as-vacant site premise and an as-improved property premise, support both. A narrative format alone does not mandate both in every case.
Why This Is the Correct Answer
Option D is correct because the assignment requires separate analyses of the site as though vacant and the property as improved, so both premises must be analyzed and supported. SR 1-3 requires analysis of relevant legal, physical and economic factors to the extent necessary to support the highest and best use conclusions.
Why the Other Options Are Wrong
Option A: Analyze the income-producing uses of the property alone
Option A is wrong because analyzing the income-producing uses of the property alone does not address both required premises. Highest and best use considers legal, physical and economic factors, not only income uses.
Option B: Analyze highest and best use only if current use is illegal
Option B is wrong because highest and best use analysis is not limited to cases where the current use is illegal. It is performed whenever the assignment requires it for credible results.
Option C: Analyze the site as vacant but ignore improvements
Option C is wrong because analyzing the site as vacant while ignoring improvements leaves out the as-improved premise that this assignment requires.
Land alone, then with buildings
First picture the site empty, then picture it as built. When both are required, both get support.
How to use: Use this when a question mentions as-vacant and as-improved premises.
Exam Tip
Match the analysis to what the assignment requires; if the stem names both premises, the answer that supports both is the strongest.
Common Mistakes to Avoid
- -Analyzing only the as-vacant premise
- -Limiting highest and best use to income uses
- -Thinking highest and best use matters only for illegal uses
Concept Deep Dive
Analysis
This question tests highest and best use under Standards Rule 1-3. When the assignment calls for both an as-vacant and an as-improved analysis, the appraiser must support conclusions under both premises.
Background Knowledge
Highest and best use as though vacant identifies the ideal use of the land, while highest and best use as improved asks whether the existing improvements should be kept, modified or removed. Both rest on uses that are legally permissible, physically possible, financially feasible and maximally productive.
Real-World Application
An appraiser values an older small house on a lot now zoned for townhomes. The appraiser analyzes the land as vacant and the property as improved to judge whether the existing house still contributes value.
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