Which four tests must a use satisfy to qualify as the highest and best use of a property?
Correct Answer
A) Legally permissible, physically possible, financially feasible, and maximally productive
Highest and best use is defined as the reasonably probable use of a property that is: (1) legally permissible — allowed by zoning, deed restrictions, and other regulations; (2) physically possible — supported by the size, shape, topography, and other physical characteristics of the site; (3) financially feasible — likely to generate a positive return; and (4) maximally productive — producing the highest value among all feasible uses. All four tests must be met simultaneously for a use to qualify as highest and best use.
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Related Topics & Key Terms
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Related Concepts
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
The cost approach estimates a property's value by calculating the current cost to rebuild the improvements, subtracting accumulated depreciation, and adding the land value. It is most reliable for new construction and special-purpose properties.
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- → The income approach to appraisal is most commonly used for which type of property?
- → External obsolescence in Oklahoma:
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