Highest and Best Use

Category: business

The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible to produce the highest value.

This is the "appraiser’s compass." An appraiser might look at a failing parking lot in a downtown core and determine its "highest and best use" is actually a 10-story luxury apartment building, thereby valuing the land much higher than its current income would suggest.

Common Examples

• The appraisal report determined that the highest and best use for the abandoned textile mill was to convert it into luxury loft apartments.
• A property’s current zoning strictly dictates its potential highest and best use analysis during the commercial valuation process.