Doug in NC
Elite Member
- Joined
- Jan 17, 2002
- Professional Status
- Certified Residential Appraiser
- State
- North Carolina
A client intends to buy 2 currently-zoned residential properties with older dwellings on them (adjacent to his commercial property, both are now occupied residential homes in average condition) and convert them to a commercial-type use. Although, a commercial-type use would be the highest & best use, since they are currently zoned residential, can their highest and best use be commercial if appraised "as-is"?
It is likely that these properties could be converted to the desired commercial use since there are other commercial properties in the vicinity, but it cannot be said with certainty. With the present residential zoning in place, can it be said that highest and best use is as commercial? (commercial land sold as vacant would be more valuable than the current property which is zoned residential)
If highest and best use is commercial, does it make sense to give much value to the present residential improvements since they would (at a minimum) need to be converted for office or institutional use. My guess is that the buyer would raze the dwellings and replace them with new structures. Leaving the current residential structures would be out of character with the current structures on adjacent commercially-zoned properties. So, if commercial zoned, I would anticipate a cost to clear the land for commercial use rather than add the value of the present depreciated structures.
It is likely that these properties could be converted to the desired commercial use since there are other commercial properties in the vicinity, but it cannot be said with certainty. With the present residential zoning in place, can it be said that highest and best use is as commercial? (commercial land sold as vacant would be more valuable than the current property which is zoned residential)
If highest and best use is commercial, does it make sense to give much value to the present residential improvements since they would (at a minimum) need to be converted for office or institutional use. My guess is that the buyer would raze the dwellings and replace them with new structures. Leaving the current residential structures would be out of character with the current structures on adjacent commercially-zoned properties. So, if commercial zoned, I would anticipate a cost to clear the land for commercial use rather than add the value of the present depreciated structures.