A vacant site is zoned for either a small retail building or a mid-rise apartment project. Both uses are physically possible, but only the apartment project would support the land and development cost while producing the stronger return. Under highest and best use analysis, which use should the appraiser favor?
Correct Answer
D) The apartment project, because it is feasible and more productive
Highest and best use is the use that is legally permissible, physically possible, financially feasible, and maximally productive. Because both uses are possible but only the apartment project supports cost and yields the superior return, the apartment project should be favored.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
Many states have laws to limit how much property taxes can increase each year, regardless of market value fluctuations.
Various programs and exemptions exist to reduce the property tax burden for specific groups, such as seniors, homesteaders, or veterans.
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Appraiser Nina Patel is screening alternative uses for a corner parcel before concluding its highest and best use. Which of the following is NOT one of the accepted tests for highest and best use?
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Investors begin paying more for warehouse sites near a planned port expansion because they expect stronger rents and resale prices after the project opens. Which principle is most directly reflected in those bids?