Property Valuation
A neighborhood in Nashville is transitioning from residential to mixed-use commercial. An appraiser valuing a residential property in this area should:
AAlways use the residential value since the current use is residential
BConsider the site's value for its highest and best use (possibly commercial) in addition to the value as improved✓ Correct
CIgnore the transition since zoning has not officially changed
DAdd a 'transition premium' of 20% to comparable residential sales
Explanation
When a neighborhood is in transition, the highest and best use analysis is critical. The appraiser must consider whether the land's value for its highest and best use (possibly commercial or mixed-use) exceeds its value as improved with the existing residential structure.
Related Tennessee Property Valuation Questions
- In Tennessee, when appraising a property for tax purposes, the assessor uses which basis of value?
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- In Tennessee, which appraisal approach would be most appropriate for a new public school building?
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