Which question does the highest and best use analysis of land as though vacant try to answer?
Correct Answer
A) What type of improvement should be built on the site, and when?
The as-vacant analysis asks what type of building or other improvement should be constructed on the site, and when, to produce the highest land value. Expanding, converting or replacing an existing building is a question for the highest and best use as improved, an owner's preference is not a market test, and the highest current income does not necessarily produce the highest land value.
Why This Is the Correct Answer
Option A is correct because the as-vacant analysis identifies the type of improvement that should be constructed on the parcel, and when, to realize the highest land value. It applies to both vacant and improved parcels, since an improved site can be analyzed as though vacant.
Why the Other Options Are Wrong
Option B: Should the existing building be expanded, converted or replaced?
Option B asks whether the existing building should be expanded, converted or replaced. Those are questions about an existing improvement, which belong to the highest and best use as improved, not as though vacant.
Option C: Which use would the current owner most prefer for the site?
Option C asks which use the current owner would most prefer. Highest and best use is judged from market evidence through the legal, physical, feasibility and productivity tests, not from one owner's preference.
Option D: Which use would earn the highest current income from the site?
Option D asks which use would earn the highest current income. The as-vacant analysis looks for the improvement that produces the highest land value, and the use with the highest current income does not necessarily do that.
Empty lot asks what, when
An empty lot asks what to build and when to build it; a built lot asks what to do with what is already there.
How to use: Use this contrast to sort any HBU question into the as-vacant or as-improved premise.
Exam Tip
If an option mentions the existing building, it belongs to the as-improved analysis.
Common Mistakes to Avoid
- -Treating expansion or conversion of an existing building as an as-vacant question
- -Thinking the as-vacant analysis applies to vacant parcels alone
- -Substituting an owner's preference for market evidence
Concept Deep Dive
Analysis
The question checks the difference between the two premises of highest and best use. The as-vacant premise imagines no building and asks what should be built and when. Any question about an existing building belongs to the as-improved premise.
Background Knowledge
Highest and best use has two premises: land as though vacant and property as improved. The as-vacant premise sets land value and helps select comparables, while the as-improved premise decides how an existing improvement should be used.
Real-World Application
Appraising a lot with a small older house, an appraiser first asks what would be built on the site if it were empty, which sets the land value. Separately, the appraiser asks whether the existing house should stay, be enlarged or be replaced.
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