valuation
highest and best use
Highest and best use is the reasonably probable and legal use of land or a property that produces the highest value. To qualify, a use must be legally permissible, physically possible, financially feasible, and maximally productive. Appraisers analyze highest and best use both as if the land were vacant and as currently improved. It may differ from the current use.
- Exam tip
- Remember the four tests in order: legally permissible, physically possible, financially feasible, maximally productive. A use barred by zoning cannot be highest and best use.
- Example
- An old house on a downtown lot zoned for offices may have a highest and best use as an office building site rather than a residence.
Related terms & state variants
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Last verified: 2026-10-23