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Residential Market Analysis and Highest and Best Use.
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Residential Market Analysis and Highest and Best Use.
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Residential Market Analysis and Highestand Best Use
Utility - CORRECT ANSWER-Which segment of the real estate market does the
subject product satisfy? Who is the market? Does the product provide what the
buyer is looking for?
Desire - CORRECT ANSWER-Is there a demand for this real estate product?
Are there any potential buyers?
Scarcity - CORRECT ANSWER-How competitive is the subject property in its
market segment? (How supply and demand interact-number of homes versus
number of buyers.)
Effective purchasing power - CORRECT ANSWER-Is the value of the product
similar to the price? (A valid opinion of value for a property includes an accurate
assessment of the market's ability to pay for the property.)
The use that maximizes a property's value is its highest and best use. -
CORRECT ANSWER-True
If a property has no improvements, there is no need to perform a highest and
best use analysis of the site as though vacant. - CORRECT ANSWER-False
An interim use is a temporary use to which a site or an improved property is put
until it is ready to be put to its future highest and best use. - CORRECT
ANSWER-True
One reason to identify the highest and best use of a property is to establish a
basis for the selection of comparable sale properties. - CORRECT
ANSWER-True
In determining the highest and best use of a site as though vacant, an appraiser
may never assume that a parcel can be made vacant by demolishing any
improvements. - CORRECT ANSWER-False
, Neighborhood in transition - CORRECT ANSWER-A market area undergoing an
economic and/or demographic shift.
Ideal improvement - CORRECT ANSWER-The bridge between highest and best
use of the site as though vacant and highest and best use of the property as
improved.
Two analyses of highest and best use - CORRECT ANSWER-1. Site as though
vacant
2. The property as improved.
Legal nonconforming use - CORRECT ANSWER-A use that was lawfully
established and maintained, but no longer conforms to the use regulations of
current zoning.
Highest and best use analysis - CORRECT ANSWER-Conducted to help the
appraiser develop a basis for an opinion of the property's market value.
Site as though vacant options - CORRECT ANSWER-1. Improve: With what?
When?
2. Leave vacant: Why? Oversupplied market, limited demand, lack of or high cost
of money, absence of growth
Property as improved options - CORRECT ANSWER-1. Lease as is: Why?
Because it already meets demand.
2. Alter: Renovate or remodel. Convert to? Enlarge. Demolish
Four criteria/tests of highest and best use - CORRECT ANSWER-1. Legal
permissibility
2. Physical possibility
3. Financial feasibility
4. Maximum productivity
These tests must be applied before those for financial feasibility and maximum
productivity. - CORRECT ANSWER-Legal permissibility and physical possibility
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