Property Valuation
A Kentucky appraiser determines that a property's highest and best use is a small office building, but the current use is a single-family home. The difference in value between the current use and the highest and best use represents:
AFunctional obsolescence
BSurplus land value
CAssemblage premium
DLand development potential value✓ Correct
Explanation
When a property's current use does not represent its highest and best use, there is development potential value — the value that would be unlocked by converting to the highest and best use. This potential often influences the property's market value.
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