Valuation matters – Appraisers apply 4 tests to determine highest and best use

Description

Abstract: An important factor for an appraiser to consider when valuing real property is its “highest and best use.” This may not necessarily be its current use, though. The Appraisal Institute defines highest and best use as “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.” This article reviews the four tests appraisers typically apply to determine that use.