HBU Commentary?

[BarrySW1963]

Can y'all provide some examples of what you consider to be sufficient HBU commentary?

Specifically, some examples from recent reports?

I'd love to see some for standard tract homes, and some for more complex assignments.

 

[Meandering]

Highest and Best Use:The subject’s site is considered to be physically available for development. Use of the subject’s site is restricted to detached, single family use in accordance with conditions and restrictions that run with the land and bylaws of the PUD. The zoning is for residential. Covenants, restrictions and by laws of the association limit the use of the site to only detached, single family use. Highest and Best Use of the site is considered to be to single family, detached, residential use. This use is permitted under the zoning ordinance and is considered the only use that is economically feasible for the size and location of the site and for its location in a residential PUD also considering the restrictions that run with the land. As of the effective date, the subject was improved, single family, detached, residential use, which was the highest and best use of the land as improved

 

[Meandering]

HIGHEST AND BEST USE: Highest and best use may be defined as: “The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value.”[1] The subject’s site is physically and legally available for development; it is financially feasible and maximally productive for the subject’s site to be used as a combination mixed use retail/residential space. Given the size of the subject’s lot, the maximally productive use of the site is limited due to the lack of on-site parking. Therefore the highest and best use of the subject’s site is considered to be mixed use with small commercial enterprises serving the neighborhood on the first floor and residential units above.

The subject is improved with a mixed use building and associated paved parking lot. It is considered to be 100% coverage of the lot. The first floor has 3 interior subdivisions with separate entrances, however, the smallest space at the rear of the building lacks a restroom facility, and lacks access to a common restroom facility, and is not considered to be available as a separate rental unit. On the effective date of value it was an ancillary space of the spa/salon.

There is little new development in the subject’s neighborhood of a mixed use nature. One newer office building across North Street from the subject, and several newer residential homes were noted in the neighborhood. Several mixed use buildings predominate the commercial aspect of this section of the subject’s neighborhood. Considering the good condition of the subject’s improvements, the conformity within the neighborhood, the stability of ownership within the neighborhood, the size and configuration of the lot, and the costs to raze, the current improvements are considered to be the highest and best use of the subject’s site, as improved.


[1] The Appraisal of Real Estate, 11TH Ed., Appraisal Institute: Chicago, IL, Page 50

 

[BarrySW1963]

Awesome, keep 'em coming.

 

[Meandering]

Highest and Best Use: The subject’s site is considered to be physically available for development. Use of the subject’s site is restricted by the zoning district. The subject is located in a residential area. Highest and Best Use of the site is considered to be single family, detached, residential use. This use is permitted under the zoning ordinance and is considered the only use that is economically feasible for the size and location of the site. As of the effective date, the subject was improved, single family, detached, residential use, which is the maximally productive use of the site and was the highest and best use of the land as improved.

As of the effective date of the appraisal, the subject property did not suffer any known easements. No easements are recorded on the deed, which is attached to this report. There were no special assessments that were known to or were found in the normal course of business from a search of the MLS and reading the deed current as of the effective date of the appraisal. The most probable buyer for the subject property was, as of the effective date of the appraisal, considered to be an owner occupier assisted with market typical mortgage financing.

 

[Michigander]

There are four tests for determining highest and best use of a property and these are applied to the property as if vacant, as improved, and related to the ideal improvement. The tests are 1) what is legally permissible; 2) what is physically possible; 3) what is financially feasible and 4) what is maximally productive.

In looking at the subject property as if vacant, the zoning allows for construction of a residential property only, which makes building a single unit property legally permissible. The second part is if building is physically possible, and given the configuration of the site, it does appear to be so. The third test is it financially feasible, which means would the cost of construction be realized on the market given the other inherent costs such as land and site improvements. The final test is maximum productivity, or greatest return on the investment. As if the site were vacant and available for development, the most logical property to build would be a house that is in keeping with the neighboring properties, neither an over nor an under improvement. There are varying degrees of acceptability for a house that is within the area, but maximum productivity would be achieved in building a single-unit house that is not too dissimilar to others surrounding it.

Highest and best use as improved is simple in this instance. As the site is legally permissible for single-unit development and a house is already standing, it meets the first test of legal permissibility. As the house is already standing, it is obviously physically possible. Financial feasibility relates to the fact that it would be costly to raze the house and rebuild, and therefore leaving the current structure in place results in financial feasibility. Maximum productivity is achieved through the subject property being similar to others that are in the immediate vicinity in overall quality and size. The last part, that of the ideal improvement, is related to maximum productivity. If a house is atypical for the market in which it competes, or needs significant work, or is under-sized, it may well not be at the current ideal improvement state. The subject, as currently built however, is typical (albeit on the larger size) for the neighborhood but is in need of a new roof and soffits at this time, not remodeling. It has some outdated improvements such as original baths and older carpeting in the family room, but is not significant, and is therefore the ideal improvement other than the typical updating that occurs over time.

 

[Meandering]

Highest and Best Use:The subject’s site is considered to be physically available for development. Use of the subject’s site is restricted to detached, single family use in accordance with conditions and restrictions that run with the land and bylaws of the PUD and the zoning district. Covenants, restrictions and by laws of the association limit the use of the site to only detached, single family use. Highest and Best Use of the site is considered to be to single family, detached, residential use. This use is permitted under the zoning ordinance and is considered the only use that is economically feasible for the size and location of the site and for its location in a residential PUD also considering the restrictions that run with the land. As of the effective date, the subject was improved, single family, detached, residential use, which was the highest and best use of the land as improved.

The minimum lot size in the township and in the zoning district is 1 acre. The subject is less than one acre. The existing home could be rebuilt if prematurely destroyed. However, land of this size may or may not be buildable depending on percolation tests and zoning officer. There have been no land sales in the subject’s PUD in the past five years found in the MLS. There are two undeveloped lots listed for sale in the MLS in the subject’s PUD of similar size, they are:

 

[George Hatch]

Based on the subject's R1 (Single Family Residential) zoning the existing use type is legally permissible. Based on its presence onsite the existing use is physically possible. Based on the fact that the value of the existing use exceeds the value of the site as is vacant it is a financially feasible use. In lieu of any legally permissible alternative that would economically justify redevelopment of this site the existing use can therefore be considered a reasonable expression of the concept of highest and best use of the property's in its "as is" condition.

 

[Terrel L. Shields]

(The definition of HBU is found elsewhere)
The highest and best use of the subject is projected based upon location, physical characteristics, past and proposed uses, and applicable zoning.

The highest and best use of the subject property "as if vacant", in my opinion is for rural residential purposes. This would entail the construction of appropriate improvements to utilize for that purpose. An appropriate improvement would be a dwelling, perhaps with an ancillary barn or shop for hobby or animal husbandry. It also might have potential for a poultry farm as an alternative use.

The highest and best use of the subject "as improved" is its current use. Large acreage rural homes are typical in the area. A detached barn has utility for animal husbandry. The improvements have remaining economic life; is the probable future use; is the current and previous use and is legally permissible by zoning or probable future zoning; appears to be financially feasible; and is the maximally productive use available to the subject.

The Highest and Best Use of the subject, as revealed by my investigation, is that indicated "as improved."

 

[Terrel L. Shields]

Would be interested in how people treat a vacant parcel HBU, say an 80 acre tract that is in rugged country and might be suitable for a seasonal cabin or perhaps only as a hunting camp, recreational parcel etc. We are seeing more people buying 40 to 100 acres just to hunt on. I've appraised three in the past year. One was over 500 acres and has a small cabin and electricity. The others has no improvements. All three had very narrow access "pipestems" to get into the property, and no level land for say building a poultry farm etc. They were basically 4WD territory.