Property Valuation
In real estate appraisal, what does 'highest and best use' mean?
AThe use that generates the most rental income
BThe most profitable legally permitted, physically possible, financially feasible, and maximally productive use of a property✓ Correct
CThe use designated by the city's general plan
DThe current use of the property
Explanation
Highest and best use is the use that produces the highest value while being (1) legally permitted, (2) physically possible, (3) financially feasible, and (4) maximally productive. Appraisers determine highest and best use before selecting their valuation approach.
Related California Property Valuation Questions
- A property's assessed value is $360,000 for tax purposes. A comparable home on the same street recently sold for $600,000. What assessment ratio is being applied?
- An appraiser uses the 'before and after' method when appraising property affected by:
- What is 'market value'?
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- Net Operating Income (NOI) is calculated as:
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- The effective age of a building refers to:
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