Property Valuation
Highest and best use is defined as the use that is:
AMost profitable for the developer
BLegally permissible, physically possible, financially feasible, and maximally productive✓ Correct
CPreferred by the surrounding community
DThe most recent approved use
Explanation
Highest and best use is the reasonably probable use that is: (1) legally permissible, (2) physically possible, (3) financially feasible, and (4) maximally productive — resulting in the highest property value. It is the foundation of the appraisal process.
Related California Property Valuation Questions
- The principle of progression in real estate means:
- The cost approach to appraisal is MOST useful for which type of property?
- What does a capitalization rate (cap rate) measure?
- A neighborhood is zoned residential but has deteriorating properties, declining rents, and increasing vacancies. What stage of the neighborhood life cycle does this describe?
- Functional obsolescence refers to:
- The principle of 'substitution' in real estate valuation holds that:
- The income approach to value is most appropriate for:
- The principle of anticipation states that value is:
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →