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Chapter 7 Land Site Highest and Best Use

Chapter 7 Land Site Highest and Best Use - Highest and Best...

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Highest and Best Use Chapter 7
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Important Words and key Concepts n Assessors Maps n Assisted Living n Ingress n Financially Feasible n Physically Possible n Zoning Regulations n Public Restrictions n Cooperatives n Encroachments n Census Tract Maps n Elderly Housing n Egress n Legally Permissible n Maximally Productive n Building Codes n Cul-de-Sacs n Private Restrictions n Easements 2 12/9/11 Land/Site Considerations for Highest and Best Use - Harrison - Chapter 7
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Important Words and key Concepts n Bundle of Rights n Highest and Best Use n Environmental Regulations n Homeowners’ Association n Plottage Value n Site n Mini-Warehouses n Vacant Land n Beneficial Interest n Police Power n Environmental Restrictions n Party Wall Agreements n Riparian Rights n Subsurface Rights n Mobile Homes n Timeshare Ownership n Wetland Controls 3 12/9/11 Land/Site Considerations for Highest and Best Use - Harrison - Chapter 7
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Highest and Best Use: Land/Site n The highest and best use of a property treats it as if it were a lot standing alone. In other words if there is a home sitting on a lot in a residential neighborhood, is there a more profitable use of the property? n I there is a home amidst high rise hotels a block from the Los Angeles International airport there is every chance that the lot would generate greater value as a hotel, office building, or corporate headquarters for some international company. 4 12/9/11 Land/Site Considerations for Highest and Best Use - Harrison - Chapter 7
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Highest and Best Use: Land/Site n The USPAP at Standards 1, Rule 1-3(b) directs the appraiser to “develop an opinion of the highest and best use of the real estate.” n The Standards have a comment section regarding the different Standards, there is a comment for this Standard. n An appraiser must analyze the relevant legal, physical, and economic factors to the extent necessary to support the appraiser’s highest and best use conclusion(s). The appraiser must recognize that land is appraised as though vacant and available for development to its highest and best use. 5 12/9/11 Land/Site Considerations for Highest and Best Use - Harrison - Chapter 7
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Highest and Best Use: Land/Site n The highest and best use then is the use of the land on the “Subject Property” if it were used to its’ greatest profit. n You would have to determine what use would be the most valuable, then estimate the amount of time, work and money it would take to get the land in shape for the new proposed building, and finally determine the cost of tearing the old structures down and carting the debris away. 6 12/9/11 Land/Site Considerations for Highest and Best Use - Harrison - Chapter 7
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Identification of Subject Property n This may not be clear but every appraisal addresses the issue of “Highest and Best Use” and you should make a comment in the addendum part of your appraisal regarding this issue.
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