Property Valuation
The highest and best use of a property is defined as the use that is:
AThe current use of the property
BLegally permissible, physically possible, financially feasible, and maximally productive✓ Correct
CThe use preferred by the current owner
DThe use assigned by the zoning authority
Explanation
Highest and best use is the reasonably probable use that is legally permissible, physically possible, financially feasible, and maximally productive in terms of value.
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Key Terms to Know
Zoning
Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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