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Flashcards in Highest and Best Use Deck (3)
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1

Quantity and Quality of Income

The concept of highest and best use is extremely important in real estate. It is the use of land that will, over a given period of time:
Preserve the land's utility;

Provide the greatest net income; and

Result in the greatest present value of the land.
The highest and best use is determined by evaluating the quantity and quality of income from various alternative land uses. Net return is normally interpreted in terms of money, although consideration may be given to such things as amenities. To achieve highest and best use, land is improved by the use of capital and labor to make the land more productive.

2

Considering Factors

All of the physical and economic factors mentioned earlier are taken into consideration to determine the highest and best use of land. A given parcel of land has only one highest and best use at any particular time.
For appraisal purposes, land is always valued as if vacant and available for development to its highest and best use. The estate taxes and the real property taxes paid by an owner of unimproved real estate are usually based on the highest and best use of the land rather than the use to which it is actually devoted. Loss of income to the land resulting from failure to use the land to its highest and best use will cause the value of the property to be less than fully realized.

3

Highest and best

The highest and best use of land is the use that preserves the land utility; provides the greatest net income; and results in the greatest current value. To achieve highest and best use, land is improved by the use of capital and labor to make the land more productive.