The appraiser will examine those governmental and private

Chapter 4 Highest and Best Use Flashcards Is the highest and best use of the land, in the mind of the appraiser, legally permissible?The appraiser will examine those governmental and private restrictions on the use of the land area. Is the appraiser's decision on the highest and best use permitted with the existing zoning for the property? Is there a good probability that the zoning for the property could be changed? The appraiser should inquire about historical decisions concerning zoning change requests and review the community's long range development plans. Are there private deed restrictions or land use covenants which would further limit the highest and best use of the land area? Covenants may limit the size or building height of any improvements that could be constructed on the land.Are there governmental environmental restrictions which would limit the optimum use of the land in question?If the highest and best use of the land is not in accordance with the existing zoning requirements, are special use permits available? What is the community's history for approval of special use permits? Is the land located within a historical district? If so, there may be additional governmental restrictions on the use of the land area. Alterations for the use of the land may be prohibited by the restrictions. Is there a long-term lease on the land? Long-term leases may specify a particular use of the land for a given period of time. They may specify additional restrictions which would narrow the allowable highest and best use of the land.Is the highest and best use of the land, in the mind of the appraiser, financially feasible?This consideration is also called economic feasibility. There are two interconnecting analyses required for this determination as to the highest and best use for the land.The first analysis is the inferred analysis of the relationship between the supply and the demand for a site's particular highest and best use. Is there a need or demand for this use of the land? How many other similarly used land areas are there in the market area? Can the market support another land use of this type? The appraiser will reflect on the principle of competition.Legal Permissibility as Vacant Process1. Zoning2. Building Codes3. Historic Area?4. Deed Restrictions and Covenants5. Consult Master Plan Physical Possibility - As VacantLooking at the parcel or viewing the land using a topographical map may indicate that the shape of the site is or is not conducive to the development of the legally permitted uses. The site will have to be large enough to

facilitate the highest and best use. This may require additional analysis from the market place to determine how much land area is required for the proposed use.Will the proposed improvement fit on the site?Is the land area level or is it rolling?Will excavation of the site be required?How much dirt will have to be removed from or brought onto the site?Is the site below grade and is this advantageous for the proposed use?Are the public utilities available at the site boundaries or, if not, how far away from the site are they?How much will it cost to bring the utilities to the site?Will the existing utilities be adequate for the proposed highest and best use?Is the ground strong enough to support the proposed improvement?Will soil density tests be required?Negative answers - or excessive site development costs - will help the appraiser eliminate potential uses from consideration of financial feasibility.Maximum Productivity - As VacantWhile there may be several uses which would attain profitability, only one will result in the maximum productivity for the property.Which one of the considered several uses

will return the greatest profit to the investor?If the property is not an income generating property, which one of the considered uses will produce the greatest increase in value for the property owner?That use which produces the greatest return to the land, is the highest and best use, as vacant.Once the highest and best use, as vacant, has been concluded, the appraiser is now prepared to move into the analysis of the highest and best use of the land as it is currently improved.Special Purpose PropertiesThese are properties which have been improved for a very specific purpose. In other words, their improvements were

constructed to serve a singular purpose. Value, or the generation of income, may not have been the primary motivation for their initial development.Various municipal buildings may fall into this category. What is the highest and best use of a vacant post office building? How about the fire station that was abandoned because the new fire fighting equipment would not fit into the building? We have seen local school boards close school buildings because of consolidation. Places of worship have been closed because of the shortage of ministers of the faith. Are these types of assignments to be considered complex assignments? One would certainly think so.In accepting this type of assignment and rendering an opinion of highest and best use, the appraiser is required to assume a completely different market-derived use. Not only must the four factors of analysis be observed for the best use of the land as if it were vacant but the appraiser must decide, based upon the market, if the present improvements actually contribute to the overall value of the property as improved with the special use building that presently occupies the site.What logical alternative use of this special purpose property would the market be willing to accept?Places of worship have been transformed into specialty restaurants and former schools have been remodeled for apartment use. The market will perceive an alternate use for these improved properties and they will begin a new life cycle. Most likely, the appraiser will have expanded his or her market area to identify the demand for this type of property. Who is the typical buyer for this type of property?What are some of the alternate uses for this type of property? The performance of additional analysis is required to support the market acceptance and desirability for these once defined special purpose properties. As a special use property, their economic life has ended. The appraiser must (by analysis) determine if there is an alternative economic life for the improvement. Will the appraiser's determination of the new highest and best use for the property, as improved, contribute to the overall value as perceived by the market? Are the improvements still functional enough for a renovation process? Is it economically feasible to renovate and restore the building for a new highest and best use?Would it be more economical to demolish the present improvement and start over again? If this were the most economical process, the appraiser must then consider the costs of demolition (less