Highest and Best Use Decisions. Wayne Foss, DBA, MAI, CRE, FRICS Foss Consulting Group Email: [email protected] Highest and Best Use. Definition:
The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.
1. Basis for Value (Highest and Best Use)
2. Application of the Three Approaches
Note: The thorough study of market forces that affect use and value requires study time at leastequivalent to the study time afforded to measuring that value by applying the appropriate techniques and procedures of the valuation approaches.
1. The model must consider the amount and timing of all cash flows.
2. The model must consider the time value of money.
3. The model must consistently select the use that will produce the highest financial reward.