Highest and Best Use

Definition: Highest and best use is the reasonably probable use that is legally permissible, physically possible, financially feasible, and maximally productive.

Example

A proposed apartment building must satisfy zoning, fit the site, and be financially feasible before its expected productivity is compared with other uses.

Keep the distinction clear

The use with the highest potential revenue is not automatically the answer. Consider the property as vacant and as improved when appropriate.

Related terms

Market Value · Zoning Ordinance · Overimprovement

Keep studying

Comparable Sales: Adjustments and Weighted Values

References: California DRE: appraisal and valuation concepts

Pronunciation (US): HY-ist and BEST YOOS (capitals show stress)

Pronunciation reference: Merriam-Webster