Property Valuation
What is 'highest and best use' in Nevada real estate appraisal?
AThe most expensive possible use for a property regardless of restrictions
BThe reasonably probable use that is legally permissible, physically possible, financially feasible, and maximally productive — the use that produces the highest land value✓ Correct
CThe current use of the property regardless of its development potential
DThe use preferred by the property owner
Explanation
Highest and best use (HBU) is the foundation of the appraisal process. The four tests are: legally permissible (zoning, CC&Rs allow it), physically possible (site size, shape, utilities support it), financially feasible (the use generates a profit), and maximally productive (the use that generates the greatest land value). In Las Vegas, a vacant lot zoned commercial may have a HBU as a convenience store rather than single-family residential, significantly affecting its value.
Related Nevada Property Valuation Questions
- What is a land residual analysis and how is it used in Nevada real estate?
- What is the economic life versus the physical life of a building in Nevada appraisal?
- What is 'external obsolescence' in real estate appraisal and provide a Nevada example?
- What is a 'paired sales analysis' in real estate appraisal and how is it used in Nevada?
- What is 'assemblage' and 'plottage' in real estate valuation?
- What is a 'capitalization rate' (cap rate) and how is it used in Nevada commercial real estate?
- What is 'over-improvement' and how does it affect Nevada home value?
- In the sales comparison approach, a Nevada appraiser adjusts comparables for differences with the subject property. If a comparable is SUPERIOR to the subject in a feature, how is the adjustment made?
Practice More Nevada Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Nevada Quiz →