Property Valuation
In Maryland, a property's 'highest and best use' is the use that is:
AThe current legal use of the property
BLegally permissible, physically possible, financially feasible, and maximally productive✓ Correct
CThe most intensive development possible
DThe use specified in the deed
Explanation
Highest and best use is the use that meets all four tests: legally permissible, physically possible, financially feasible, and maximally productive (highest return to the land).
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Key Terms to Know
Deed
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
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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