Chapter 4 Highest & Best Use

A single-family home is situated on a commercially-zoned lot. It would not be financially feasible to convert the home to commercial use, because there is not enough demand for commercial properties at this time. Demand for industrial property is very strong; however, a zoning change is unlikely. Demand for commercial properties is expected to increase as the community grows. What is the ultimate highest and best use for this property? Industrial use Commercial use Recreational use Not enough information has been provided

Commercial use

"A use that is lawfully established and maintained, but no longer conforms to the use regulations of the zone in which it is located" is the definition of what term? Highest and best use Interim use Illegal use Legally nonconforming use

Legally nonconforming use

A commercial use was established in 1975. The local municipality rezoned the property in 1990 to permit only residential uses. The commercial use is permitted to continue its operations. What is this? Legally nonconforming use Interim use Illegal use Variable use

Legally nonconforming use

A single-family residence is located in a commercially-zoned area. Residential sale prices in the area range from $80-90 per square foot. The residence could be converted to offices at a cost of $25 per square foot. Office space in this area is selling at $90-100 per square foot. What is the highest and best use of this property? convert the residence into offices raze the residence and build a new office continue use as a single-family home determine what the owner wants to do with the property

continue use as a single-family home

When testing for highest and best use, which criterion (or test) is applied last? physically possible legally permissible financially feasible maximally productive

maximally productive

A sports arena with restaurants and retail shops on the lower level would best be described as what type of property? non-conforming use interim use multiple use property illegal use

multiple use property

All of these statements concerning Fannie Mae's position on highest and best use is true, except for Fannie Mae will only purchase or securitize a mortgage that represents the highest and best use of the site as improved. If the current improvements clearly do not represent the highest and best use of the site as an improved site, the appraiser should stop and not complete the appraisal report. The appraiser's highest and best use analysis of the subject property should consider the property as it is improved. If the use of comparable sales demonstrates that the improvements are reasonably typical and compatible with market demand for the neighborhood, and the present improvements contribute to the value of the subject property so that its value is greater than the estimated vacant site value, the appraiser should consider the existing use as reasonable and report it as the highest and best use.

If the current improvements clearly do not represent the highest and best use of the site as an improved site, the appraiser should stop and not complete the appraisal report.

Is an opinion of highest and best use required in an appraisal that is NOT based on market value? Yes, it is required in all appraisals No, but it still may be necessary for credible assignment results No, it is never required in non-market value appraisal assignments

No, but it still may be necessary for credible assignment results

A property has one acre, in an area where half-acre lots are common. There is a single-family home located at one end of the property, and is situated in such a way that a half-acre site could be sold off and developed without affecting the existing homesite. Which statement best describes this situation? The subject property is an interim use. The subject property is a legal non-conforming property. This is a surplus land situation. This is an excess land situation.

This is an excess land situation.

A home is situated on a two-acre site, in an area where one-acre sites are common. The home is directly in the center of the property, and it is not possible to subdivide off and develop a one-acre site from the subject site. This situation is best described as _______ situation an excess land a surplus land a non-conforming use an interim use

a surplus land

Who would be the most likely purchaser for a multi-use property? a speculator who converts the property to a single use a residential owner-occupant an investor any of these

an investor

An appraiser's highest and best use conclusion is always: a fact an opinion an assumption an educated guess

an opinion

A duplex is located in a commercially-zoned area. Residential sale prices in the area range from $75-85 per square foot. The residence could be converted to professional offices at a cost of $15 per square foot. Office space in this area is selling at $110-120 per square foot. What is the highest and best use of this property? raze the duplex and build a new office continue use as a single-family home convert the residence into offices whatever the owner says it is

convert the residence into offices

A single-family residence is located in a commercially-zoned area. Residential sale prices in the area range from $100-110 per square foot. The residence could be converted to offices at a cost of $20 per square foot. Office space in this area is selling at $135-150 per square foot. What is the highest and best use of this property? convert the residence into offices raze the residence and build a new office continue use as a single-family home determine what the owner wants to do with the property

convert the residence into offices

If the improvements have a negative value, an appraiser must consider __________ in the feasibility analysis. published cost manuals demolition cost loss of income reproduction cost

demolition cost

Land that is larger than typical for the area, larger than what is required for the subject's use, and is capable of being sold for a separate use is: excess land surplus land non-conforming land interim land

excess land

The use that produces the optimum value for the property is its: current use highest and best use legal non-conforming use optimal use

highest and best use

A property is currently zoned for agricultural use, but its highest and best use is expected to change to commercial use within the next 3-5 years. The subject property's current use is considered special purpose interim use illegal use legal, non-conforming use

interim use

An appraiser is analyzing a parcel of vacant land, on a back road in a rural area. The owner tells the appraiser he plans to build a fast-food restaurant on the land. There is no zoning, and no other significant land use restrictions. The appraiser determines the highest and best use is NOT to build a fast food restaurant. What is the most likely reason for this conclusion? it is not physically possible it is not legally permissible it is not financially feasible none of the above

it is not financially feasible

The market value of the land is always determined based on: its current use its highest and best use the Sales Comparison Approach a current date

its highest and best use

Which highest and best use criterion would require an appraiser to consider minimum lot sizes and height restrictions imposed by a local municipality? physically possible legally permissible financially feasible maximally productive

legally permissible

When testing for highest and best use, which two criteria (or tests) are applied first? physically possible and financially feasible legally permissible and physically possible legally permissible and financially feasible financially feasible and maximally productive

legally permissible and physically possible

A commercial building which is a legal nonconforming use in a residential neighborhood would be considered: under-improvement over-improvement illegal use none of the above

over-improvement

Which highest and best use criterion would require an appraiser to consider excavation or filling that may be required in order for a site to accommodate an improvement? physically possible legally permissible financially feasible maximally productive

physically possible

Which highest and best use criterion would require an appraiser to consider what improvements would fit on the site? physically possible legally permissible financially feasible maximally productive

physically possible

A vacant site is zoned for use as a single-family homesite, and it is unlikely to be changed. As a single-family homesite, the site is worth $75,000. As a commercial site, it would be worth $150,000. What is the highest and best use of this property? commercial use single-family homesite neither of these

single-family homesite

All appraisal assignments that require a market value opinion imply that: the USPAP definitions of market value and highest and best use will be used the appraiser has inspected the interior of the property improvements the property will be valued at its highest and best use there is only one definition of market value

the property will be valued at its highest and best use

In highest and best use analysis, how do we determine maximum productivity? the use that results in the highest property tax the use that results in the highest land value the use that is the most acceptable to local residents the use that is acceptable to the local zoning board

the use that results in the highest land value