Chapter 15 - The Real Estate Market and Analysis (1%)

Question 1

Section 15.5: HIGHEST AND BEST USE

:::STATE EXAM CONTENT AREA: XV.A: CHARACTERISTICS OF THE REAL ESTATE MARKET:::

Answer 1

*** The highest and best use of a parcel of real estate is the legal use that generates the most return on the land and any improvements on the land when compared to alternative uses.

*** There are 4 CRITERIA used to determine the highest and best use of a parcel. The use of the land must be:

1) LEGALLY PERMISSIBLE
2) PHYSICALLY POSSIBLE
3) FINANCIALLY FEASIBLE
4) MAXIMALLY PRODUCTIVE

*** SEE BOOK FOR AN EXAMPLE