A small single-family house sits on land now surrounded by mid-rise medical offices. The house is still habitable, but recent land sales show the site would command much more as part of an office redevelopment assemblage, and the existing improvement adds less than the land's redevelopment potential. What is the most defensible highest and best use conclusion?
Correct Answer
C) Redevelopment for office use, because the existing improvement no longer represents the maximally productive use
Highest and best use can differ from the current use when the existing improvement no longer represents the maximally productive use of the site. If market evidence shows the land is worth more for office redevelopment and the house contributes less than that alternative, redevelopment is the stronger appraisal conclusion.
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An appraiser notes that a once-stable neighborhood has gained a commuter rail stop, new employers, and a major streetscape upgrade over the last three years. Which principle reminds the appraiser that value is affected because real estate markets are constantly in flux?
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