Property Valuation
What is 'highest and best use' analysis and why is it the foundation of real estate valuation in Pennsylvania?
AAn appraisal technique selecting the most profitable use of land regardless of legal constraints
BThe reasonably probable use of a property that is physically possible, legally permissible, financially feasible, and maximally productive✓ Correct
CA zoning designation indicating the land's optimal use under the current ordinance
DA PADEP assessment of the most beneficial environmental use for a contaminated site
Explanation
Highest and best use (HBU) is the foundation of market value — value is maximized when property is put to its HBU. A use must meet all four tests: (1) physically possible (can the land support it?
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
ZoningLocal government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Math Concepts
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