What question does highest and best use as improved answer?
Correct Answer
D) Whether the existing use should continue, change or intensify
Highest and best use as improved addresses how an already-improved property should be used: whether the existing use should be intensified, changed or kept. The as-vacant analysis identifies what should be built and sets land value.
Why This Is the Correct Answer
Option D is correct because highest and best use as improved attempts to determine whether the existing use of the property should be intensified, changed or remain the same. It applies only to properties that already have improvements.
Why the Other Options Are Wrong
Option A: Which building should be built on the land if it were vacant
Option A, which building should be built on the land if it were vacant, is the question answered by highest and best use as vacant, not as improved.
Option B: What the existing improvements would cost to build new today
Option B, what the existing improvements would cost to build new today, is a cost approach question about replacement or reproduction cost. It is not a highest and best use question.
Option C: Which use produces the highest land value as though vacant
Option C, which use produces the highest land value as though vacant, describes the as-vacant analysis that supports land value, not the as-improved analysis.
Vacant builds, improved decides
As vacant asks what to build; as improved asks whether to keep, change or intensify what is already there.
How to use: Use this split to match each HBU question to the correct analysis.
Exam Tip
If the option mentions building on vacant land or land value, it is the as-vacant analysis. If it concerns existing improvements, think as improved.
Common Mistakes to Avoid
- -Confusing as-improved analysis with as-vacant analysis
- -Treating replacement cost as a highest and best use conclusion
- -Applying as-improved analysis to vacant land
Concept Deep Dive
Analysis
This question tests the difference between highest and best use as vacant and as improved. The as-improved analysis applies only to improved properties and asks whether the existing use should be intensified, changed or kept. Questions about what to build, or about land value, belong to the as-vacant analysis.
Background Knowledge
Highest and best use is analyzed two ways. As vacant identifies the ideal improvement and supports land value; as improved decides what to do with the existing improvements. Comparing the two helps identify whether improvements contribute value or should be modified or removed.
Real-World Application
An appraiser values an older single-family home on a lot zoned for duplexes. Her as-improved analysis considers whether the home should remain, be converted or be expanded, based on the market evidence.
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Previous Question
A rural tract can be leased for sand extraction that yields a very high annual income but exhausts the deposit and leaves the land of little use within three years, or planted as an orchard that yields lower but sustained income. Both uses are legal, physically possible and financially feasible. Which use is the highest and best use?
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A developer owns two contiguous vacant lots. Lot 1 has 6,000 square feet and is worth $30 per square foot alone; Lot 2 has 9,000 square feet and is worth $28 per square foot alone. Combined under the developer's single ownership, the 15,000-square-foot site supports a larger building, and the market values it at $34 per square foot. What plottage value results?