Property Valuation
In Minnesota, a property that has been zoned for commercial use but is currently being used as a residence represents what type of value situation?
AMarket value equals homestead value
BPotential value mismatch—the highest and best use may be commercial, but the current use is residential✓ Correct
CThe residential use creates no value impact
DAutomatic enhancement of value due to commercial zoning
Explanation
When a property is zoned for a higher-intensity use (commercial) but is currently used as a lower-intensity use (residential), a highest and best use analysis may indicate that the commercial potential drives value—especially if the location is transitioning. The appraiser must analyze whether conversion to commercial use is financially feasible.
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