Re appr

1. Unit 7: Highest and Best Use & Site Valuation

2.  Influence of Highest and Best Use on Site
Value
• Four Tests of Highest and Best Use
o Physically possible
 Every site has physical characteristics that determine its
highest and best use.
o Legally permitted
 Current zoning and other land use regulations normally
define legally permitted uses.
 Zoning laws execute general plans and control the mix of
properties in a particular area.
o Economically feasible
o Maximally productive

3.  Influence of Highest and Best Use on Site
Value (continued)
• Four Tests of Highest and Best Use
o Legally permitted
 Legally non-conforming uses are those uses that are
grandfathered when new zoning regulations are adopted.
 Typically, the local zoning authority issues conditional use
permits or variances.
• These permit certain uses that are not otherwise allowed in
a certain zoning district, but which are beneficial to the
community.
 Interim use is a short-term and temporary use of a
property until it is ready for its expected highest and best
use.

4.  Influence of Highest and Best Use on Site
Value (continued)
• Four Tests of Highest and Best Use
o Economically feasible
 The principle of supply and demand is the basis for
economic feasibility.
o Maximally productive
 A maximally productive use produces the greatest return
on investment. For income property, determining the
highest rate of return might involve studying several
alternatives and design configurations.
o Application of the Tests
 The convention is that these criteria usually be considered
sequentially, as a process of elimination.

5.  Influence of Highest and Best Use on Site
Value (continued)
• Four Tests of Highest and Best Use
o Non-Economic Highest and Best Use
 There is a controversy within the appraisal profession and
conservation movement regarding something termed
non-economic highest and best use.
 Sometimes the highest and best use does not necessarily
produce the most income, but instead takes into account
the contribution of a specific use to the community and
community developmental goals.

6.  Physical Aspects Influencing Site Value
• Introduction
o A tract is a piece of land in an unimproved state. It
does not have utilities, sewer lines, etc., and it is not
ready to build on.
o Once a tract has been prepared for construction, it
becomes a site.
• Size
o The size of a site is a key factor in determining its
value because the size influences how the site may be
used.
o Usable area is the portion of the site that is suitable for
building.

7.  Physical Aspects Influencing Site Value
(continued)
• Size
o Assemblage and Plottage
 Assemblage is the process of combining two or more
small sites to form a larger one.
 Plottage is the added value that results from the
assemblage process.
o Excess and Surplus Land
 Excess land (for an improved site) is the land not needed
to serve or support the existing improvement.
 Conversely, surplus land is land that is not necessary to
support the highest and best use of the existing
improvement.

8.  Physical Aspects Influencing Site Value
(continued)
• Shape
o After estimating the size of the parcel of land, the shape of it
comes into play.
 The shape of a site can affect both its usable area and its
overall utility.
 A cul-de-sac lot is located on a dead-end street.
 A corner lot is at the intersection of two streets.
 A key lot, so named because it resembles a key fitting into a
lock, is surrounded by the back yards of other lots.
 A T-intersection lot is fronted head-on by a street.
 An interior lot is surrounded by other lots, with frontage on
the street.
 A flag lot looks like a flag on a pole, with the pole
representing the access to the site.

9.  Physical Aspects Influencing Site Value
(continued)
• Soil and Topography
o The composition of the soil determines the ability of the soil
to support the weight of the building.
o The topography of a parcel of land refers to its contours and
features.
o Drainage and Flood Hazards
 Drainage refers to natural processes or artificial pipes and
drains that remove water and moisture from land.
 The Federal Emergency Management Agency (FEMA) is a
government agency that is involved with all the different
aspects of emergency management from preparation to
recovery and prevention.
 As a part of its work, FEMA identifies flood-prone areas
called Special Flood Hazard Areas.

10.  Physical Aspects Influencing Site Value
• Soil and Topography
o Grading
 Grade is the slope of the surface of the ground expressed
as a percentage.
 An example would be a 2% grade, where the slope climbs
2 feet for every 100 feet of horizontal distance.
 Sometimes the level or elevation of the ground has to be
changed or altered using bladed machines that literally
scrape the earth in a process known as grading.
o Retaining Walls
 Retaining walls hold back earth.
 They are built where elevation changes on a property and
soil must be held back from falling down.

11.  Physical Aspects Influencing Site Value
• Soil and Topography
o Landscaping
 Landscaping is the use of vegetation around a house to
prevent erosion and improve its aesthetic appearance (curb
appeal).
 Curb appeal is the visual appeal of a property when viewed
from the street.
 Desert climates use a form of landscaping known as
zeroscaping, because it needs little or no water.
 Xeriscaping achieves water efficiency by using plants
appropriate for the natural environment.
• View
o The view of the surrounding area can be one of the most
favorable physical characteristics for a property.

12.  Physical Aspects Influencing Site Value
• Off-Site Factors Influencing Site Value
o Off-site factors include the uses that are made of
neighboring parcels, the quality of public services (e.g.,
schools, parks, and police and fire protection), and the
availability and quality of off-site infrastructure (e.g., water,
sewer, utility, and transportation systems).
o Utilities
 Public utilities originate off-site, so they are off-site factors.
 Include municipal water service or wells, electrical service,
and/or solar panels
 Utilities also refer to storm sewer or septic systems, solid
waste disposal systems like trash removal, and natural gas or
bottled propane.
 Amenities such as telephone and cable television service are
included in this category as well.

13.  Physical Aspects Influencing Site Value
• Off-Site Factors Influencing Site Value
o Access
 Another key off-site factor is access. Accessible land is
more valuable than inaccessible land.
 The appraiser must note the ingress (entrance to the site
or property) and egress (exit from the site or property)
and how they contribute to the property’s use.
 The traffic volume is the number of cars and pedestrians
that travel by a location in a given span of time.
 Traffic flow can also be a factor in an appraisal.
• Produce noise and air pollution
• Can be a hazard for residents of surrounding areas
• Poor flow or movement of traffic can adversely affect the
value of a home.