Property Valuation
In New Mexico, a 'highest and best use' analysis for a vacant commercial lot would consider all of the following EXCEPT:
APhysically possible uses given the site's characteristics
BWhat the current owner wants to do with the property✓ Correct
CLegally permissible uses under current zoning
DFinancially feasible and maximally productive uses
Explanation
Highest and best use is determined by market forces — what is physically possible, legally permissible, financially feasible, and maximally productive — not by what the owner prefers. The owner's wishes are irrelevant to the HBU analysis.
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Key Terms to Know
Zoning
Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
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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