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Highest & Best Use on Condo

timindp

Thread Starter
Junior Member
Joined
Jul 6, 2007
Professional Status
Certified Residential Appraiser
State
California
SO I completed a 1073 condo in a 55+ community where all the units in this community are basically the same. Large development, all condos. The 1073 form already has the highest and best use check box. It is checked off yes. Since this is a condo, do I really need to elaborate further on Highest & Best use?
On SFR's I always add an addendum and discuss this in further because of the land and improvements. Why would the client ask me to elaborate on the Highest & Best Use for this condo? Makes no sense.
 

alebrewer

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Joined
Mar 11, 2008
Professional Status
Certified Residential Appraiser
State
Texas
So, according to S1-3(b), when necessary for credible results, the appraiser is required to develop an opinion of the H&B, and by checking the 'yes' box, you've asserted that the H&B is the current use. Based on that, then, per 2-2(a)xii, the appraiser is required to state the opinion of H&B (which you've done), AND summarize the support and rationale for that opinion. I've found that a brief run through the 4 tests should be sufficient - especially for an assignment where there really isn't a feasible alternative H&B.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Considering the 4 tests for H&B, the only legally permissible use of the space that is the condo, is condo. No other use is considered to be legally permissible. No change in zoning is expected nor planned. Considering the size, location, and legally permitted uses, current use as a condo is the maximally productive use of the space, and is therefore, the H&B use of the subject.

Copy, paste, stop complaining.

.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
SO I completed a 1073 condo in a 55+ community where all the units in this community are basically the same. Large development, all condos. The 1073 form already has the highest and best use check box. It is checked off yes. Since this is a condo, do I really need to elaborate further on Highest & Best use?
On SFR's I always add an addendum and discuss this in further because of the land and improvements. Why would the client ask me to elaborate on the Highest & Best Use for this condo? Makes no sense.
If the form was laid out better there wouldn't be any box to check, and even if there was it wouldn't be in the site section.
 

alebrewer

Member
Gold Supporting Member
Joined
Mar 11, 2008
Professional Status
Certified Residential Appraiser
State
Texas
Considering the 4 tests for H&B, the only legally permissible use of the space that is the condo, is condo. No other use is considered to be legally permissible. No change in zoning is expected nor planned. Considering the size, location, and legally permitted uses, current use as a condo is the maximally productive use of the space, and is therefore, the H&B use of the subject.

nice!
 

alebrewer

Member
Gold Supporting Member
Joined
Mar 11, 2008
Professional Status
Certified Residential Appraiser
State
Texas
If the form was laid out better there wouldn't be any box to check, and even if there was it wouldn't be in the site section.
Trying to think of a time that H&B wouldn't be necessary for credible results - I wouldn't think so when part of the SOW is to develop an opinion of market value, but maybe someone has an example? Could see it if you're estimating Insurable value maybe? Or a rent analysis - wouldn't think so even then, though.
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
SR 1-3: When necessary for credible assignment results in developing a market value opinion, an appraiser must:

SR 2-2(a) (x) when an opinion of highest and best use was developed by the appraiser, summarize the support and rationale for that opinion;

So I guess it's not a stone cold requirement. An example of when it's not necessary might be in a condo MV assignment.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Trying to think of a time that H&B wouldn't be necessary for credible results - I wouldn't think so when part of the SOW is to develop an opinion of market value, but maybe someone has an example? Could see it if you're estimating Insurable value maybe? Or a rent analysis - wouldn't think so even then, though.
You could have a non-lending assignment where for legal purposes the question being asked is specific to an existing or alternate use to the exclusion of all other possibilities. "Legal purposes" not referring to the legally permissible element of the HBU tests but rather to legal proceedings or R-O-W or taxation or some such.

There was just an article mentioned a week or two ago where ag properties were to be assessed in their current ag use and not according to their HBU.

That definition of value will probably be different than the mortgage lending version of MV that we use in most of our other work. But I suppose they could use an alternate different MV definition. I think it would be interesting to see an example of an actual Jurisdictional Exception which precludes an appraiser from doing something they would otherwise be required to do under a specific definition of MV.
 
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