Property Valuation
In Tennessee, an appraiser who determines that a property's highest and best use is different from its current use will likely:
AIgnore the current use entirely
BValue the property based on the highest and best use, which may require a transition analysis✓ Correct
CReport only the current use value
DDefer the appraisal until the use changes
Explanation
If highest and best use differs from current use, the appraiser must value the property based on the most probable use that maximizes value, which may involve a transition period analysis and appropriate adjustments.
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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.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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