Property Valuation
A Virginia property's highest and best use is the use that is:
AThe current use of the property
BLegally permissible, physically possible, financially feasible, and maximally productive✓ Correct
CThe use favored by the local zoning board
DThe use that generates the highest rent
Explanation
Highest and best use analysis considers four tests: legally permissible (zoning), physically possible (site characteristics), financially feasible (market demand), and maximally productive (highest value).
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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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
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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