A corner parcel is in a transitioning neighborhood. How should current zoning and a possible zoning change enter highest and best use analysis?
Correct Answer
D) Analyze current rules and any reasonably probable supported change
Investigate current zoning and other relevant legal restrictions, together with reasonably probable modifications when supported by evidence. A rumor or owner preference does not establish a legally available use, and current zoning does not justify ignoring a supported change. Physical possibility, financial feasibility and maximum productivity also require analysis as appropriate.
Why This Is the Correct Answer
Option D is correct because USPAP calls for analysis of existing land use regulations and reasonably probable modifications of those regulations. The appraiser therefore analyzes the current zoning and any change that evidence shows is reasonably probable, while still testing physical possibility, financial feasibility and maximal productivity.
Why the Other Options Are Wrong
Option A: Ignore current zoning whenever the owner wants to redevelop
Option A is wrong because ignoring current zoning whenever the owner wants to redevelop lets an owner preference override legal constraints. An owner's wishes do not change what is legally permissible.
Option B: Treat any rumored rezoning as if it were already legally effective
Option B is wrong because treating any rumored rezoning as already legally effective lacks support. Only a reasonably probable change backed by evidence is considered, and it is not treated as already in effect.
Option C: Use only historical uses and disregard the current restrictions
Option C is wrong because using only historical uses and disregarding current restrictions ignores the existing land use regulations. Highest and best use is analyzed under current rules and reasonably probable changes, not past uses alone.
Current rules plus probable change
Start with today's zoning, then add only those changes that evidence makes reasonably probable, not rumors or wishes.
How to use: Use this when a question involves a possible zoning change in highest and best use analysis.
Exam Tip
Look for the phrase 'reasonably probable' in highest and best use answers; reject options that rely on rumors or ignore current zoning.
Common Mistakes to Avoid
- -Treating a rumored rezoning as already effective
- -Letting the owner's plans override legal restrictions
- -Ignoring a well-supported probable rezoning
Concept Deep Dive
Analysis
This question tests how existing zoning and a possible zoning change enter highest and best use analysis. USPAP directs the appraiser to consider existing land use regulations and reasonably probable modifications, so the analysis covers current rules plus any change supported by evidence, not rumors or owner wishes.
Background Knowledge
Highest and best use considers the legally permissible uses under current zoning and also reasonably probable changes, such as a rezoning that market and planning evidence supports. USPAP lists existing land use regulations, reasonably probable modifications, supply and demand, physical adaptability and market area trends as items to analyze when relevant. A probable rezoning may affect value, but its likelihood, timing and costs should be considered.
Real-World Application
A corner lot zoned residential sits where the city's adopted plan calls for neighborhood commercial, and nearby corners have recently been rezoned. The appraiser analyzes the current residential zoning and the reasonably probable commercial rezoning, considering timing and approval risk.
More Property Description Questions
Market analysis confirms that seller financing at 3%, versus a 6% market rate, increased a comparable sale price. What adjustment removes that financing premium?
At the same effective date, reliable value indications support $800,000 for continued use of a property as improved and $500,000 for its cleared site. Immediate demolition costs $100,000. These are the only feasible alternatives, with no other costs or timing differences. Which alternative has the higher net value?
Other relevant conditions equal, growth in the number of households with effective purchasing power in a market tends to have which effect?
In a lakefront market, paired sales show that direct water frontage has the largest price effect of any feature. Which approach to comparable selection best follows from this evidence?
Which circumstance can cause highest and best use as improved to differ from highest and best use as though vacant?
A small group of buyers in a market looks for specialized features that are uncommon in the broader housing supply. What term describes this group?
A neighborhood analysis should include all of the following EXCEPT:
A site legally permits at most 40 units and can physically support 50. Supported comparable analyses find 30 and 40 units financially feasible, with 40 units producing the highest net land value after costs, timing and required return. Which use is maximally productive among these alternatives?
Market evidence isolates a subject value loss from off-site landfill odors. Which listed cause is an external-obsolescence influence?
Which proposed use cannot pass the legal-permissibility screen without evidence that the necessary permission is reasonably probable?
People Also Study
Real Estate Market
13.6% of exam
Land or Site Valuation
4.5% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
Verified recent buyers in a competitive segment share purchasing-capacity ranges and demonstrated preferences for particular housing features. That evidence is most directly useful for which initial analysis?
Next Question
A comparable includes an assumed loan at a below-market rate. Which detailed element of comparison directly concerns that term?