highest and best use analysis

Highest and best use is a type of real estate analysis performed by appraisers to determine the best use for a given property. The four tests of highest and best use are.

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In order to be considered the highest and best use for a property the use must be.

. Highest and Best Use is the reasonable probable and legal use of vacant land or an improved property. Physically possible You must consider the size shape topography and accessibility of the site when determining if it is physically possible. The HABU conclusion can affect the quantitative result of a valuation damages transfer price royalty rate exchange ratio or other type of analysis.

Highest and Best Use Example. In each type of intangible asset analysis the HABU conclusion is either explicit. There may be multiple uses that are physically possible legally permissible and financially feasible.

The conclusion of highest and best use HABU is an important consideration in each intangible asset analysis. Examples of this work include. This generally entails market analysis concept development and financial testing.

Is the use legally permissible physically possible financially feasible and is it maximally productive. According to The Uniform Standards of Professional Appraisal Practice 2002 highest and best use is defined as The reasonably probable and legal use of property that is physically possible appropriately supported and financially feasible and that results in the highest value. In this issue of The Appraisal Journal we offer a reprint of a key chapter of the 15th edition The Application of Highest and Best Use Analysis.

The HABU conclusion can affect the quantitative result of a valuation damages transfer price royalty rate exchange ratio or other type of analysis. 1 legally permissible 2 physically possible 3 financially feasible and 4 most profitable. Heres a breakdown of the four criteria that Highest and Best Use must meet.

To make this assessment appraisers ask themselves four questions. The highest and best use of a property is the one use that. The conclusion of highest and best use HABU is an important consideration in each intangible asset analysis.

Alternatively the probable use of land or improved property specific with respect to the user and timing of the use that is adequately supported and results in the highest present value. The four criteria the highest and best use must meet are legal permissibility physical possibility financial feasibility and maximum productivity. Alternatively the probable use of land or improved property specific with respect to the user and timing of the use that is adequately supported and results in the highest present value.

Highest and Best Use Analysis Highest and Best Use Analysis is an approach to investment analysis which determines the use or mix of uses that are likely to produce the greatest net return to a property. To assess the highest and best use value analysis for a property requires extensive knowledge of the market area potential market growth zoning. The four criteria the highest and best use must meet are legal permissibility physical possibility financial feasibility and maximum productivity.

The first two tests are interchangeable in order and in many circumstances the last two are combined. Highest and Best Use Analysis STUDY Flashcards Learn Write Spell Test PLAY Match Gravity Market Analysis Click card to see definition -begins the process of narrowing the focus of the anlaysis from a broader macroeconomic view to data that is pertinent to the subject property Click again to see term 117 Previous Next Flip Space. The Appraisal of Real Estate long has been recognized as the valuation professions most comprehensive authoritative source of information for appraisers and the real estate profession.

According to the Appraisal Institute the definition for highest and best use is the reasonably probable and legal use of vacant land or an improved property that is physically possible appropriately supported financially feasible and that results in the highest value. Physically possible Legally permissible Financially feasible Maximally productive.

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