The Four Tests of Highest and Best Use
- Legally permissible
You must consider whether any zoning issues or restrictions will prevent building on or improving the lot.
Some questions to answer:
- Do you have a current survey of the property? (If not, obtain one, specifically covering boundaries to learn if easements or encroachments exist.)
- Are there any deed restrictions?
- Are there zoning issues, such as minimum lot size or maximum building height or size?
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My comments: Short and well written with good tips for the four tests. This is particularly important for vacant land and areas that are transitioning to other uses, such as changing from homes to conversion to commercial uses. Appraisal highest and best use analysis is critical.
Many residential appraisers miss these issues as most lender appraisals are for standard properties, such as subdivision homes. You can get into Very Big Trouble by just checking the check box, which is probably already checked on your form template…
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