RE3 Highest and Best Use Decisions.ppt

7/25/2019 RE3 Highest and Best Use Decisions.ppt

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Highest and Best Use Decisions

(tertinggi dan keputusan penggunaan

terbaik)

By: Rush land



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Highest and Best Use

(Tertinggi dan Penggunaan Terbaik)

Deinition:The reasonably probable and legal use o !acant land or an

i"pro!ed property# $hich is physically possible# appropriately

supported# inancially easible# and that results in the highest

!alue% The four criteria the highest and best use "ust "eet arelegal per"issibility# physical possibility# inancial easibility#

and "a&i"u" producti!ity% (Penggunaan cukup "ungkin dan

huku" lahan kosong atau properti ditingkatkan# yang "ungkin

secara isik# tepat didukung# layak secara inansial# dan yang"enghasilkan nilai tertinggi% '"pat kriteria penggunaan

tertinggi dan terbaik harus "e"enuhi adalah kebolehan

huku"# ke"ungkinan isik# kelayakan inansial# dan

produkti!itas yang "aksi"al)%

(The Dictionary o Real 'state ppraisal# th ed%# pg% 1*+)



*

Purpose o Highest and Best Use

(Tu,uan penggunaan tertinggi dan

terbaik)-arket nalysis pro!ides inor"ation on physical# legal and

econo"ic issues (nalisis Pasar "e"berikan inor"asi tentang

"asalah isik# huku" dan ekono"i)

nalysis o alternati!e uses deter"ines the Highest and Best Use

(nalisis penggunaan alternati "enentukan penggunaan tertinggidan terbaik)

Pro!ides an econo"ic basis or the use inally chosen by addressing

(-e"berikan dasar ekono"i untuk penggunaan akhirnya dipilih

dengan "engatasi):

Utility (.egunaan)

Desire (.einginan)

/carcity (.elangkaan)

'ecti!e Purchasing Po$er ('ek Daya Beli)



Purpose o Highest and Best Use#

or Real 'state ppraisals

(Tu,uan penggunaan tertinggi dan terbaik#

untuk penilaian real estat) 'stablishes the criteria or selecting co"para ble sales (-enetapkan

kriteria untuk "e"ilih pen,ualan sebanding)

'stablishes the ele"ents o co"parison (-enetapkan unsur perbandingan)

Pro!ides the basis or esti"ates o physical# unctional and e&ternal

obsolescence (-e"berikan dasar untuk perkiraan isik# ungsional dan

eksternal usang)

Pro!ides the basis or orecasts re0uired to apply the inco"e capitaliation

approach (-enyediakan dasar untuk prakiraan $a,ib "enerapkan

pendekatan kapitalisasi pendapatan)

ccupancy (Pe"ilikan)

Ti"ing (absorption) (Ti"ing 3penyerapan)

"ount (capture) (4u"lah3"enangkap)

Rents (/e$a)



+

T$o -a,or Parts o a 5aluation

ppraisal (Dua bagian uta"a dari

penilaian !aluasi)1% Basis or 5alue (Highest and Best Use)

Dasar 6ilai (Tertinggi dan Penggunaan Terbaik)

2% pplication o the Three pproaches

(PenerapanTiga Pendekatan)

7atatan: /tudi "enyeluruh dari kekuatan pasar yang

"e"pengaruhi penggunaan dan nilai "e"erlukan

$aktu bela,ar setidaknya setara dengan $aktu bela,ar

yang diberikan kepada "engukur bah$a nilai dengan

"enerapkan teknik yang tepat dan prosedur pendekatan

!aluasi%



8

pplication

5acant 9and

"pro!ed Property

9and as though !acant

Property as i"pro!ed

te"s /peciied in Highest and Best Use 7onclusions:

Physical Use

Ti"e (probable use date or occupancy orecast)-arket Participants

Typical User o /pace

-ost Probable type o buyer



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Discussion <uestions

the purpose o a highest and best use study is to

establish the basis o !alue# are the ollo$ing highest and

best use conclusions ade0uate=

5acant 9and: De!elop or retail use $hen the de"and$arrants%

"pro!ed Property: 7ontinue use as a "ulti>tenant oice

building%

the highest and best use state"ents are not ade0uate#$hat is "issing=

?hat "isunderstandings "ay lead to inade0uacies in the

highest and best use conclusions=



@

9and Use lternati!es

5acant 9and

6ature o nalysis

consideration o probable alternati!e uses'&tent o the nalysis

Usually in!ol!es "any highly co"petiti!e alternati!e

uses% Re0uires the "ost detailed study (unda"ental

analysis)%



A


9and as though 5acant

6ature o nalysis

"pro!ed property $ill continue in its current use until

the land as !acant# less de"olition cost# is "ore!aluable that the property as i"pro!ed%

'&tent o the nalysis

land !alue does not approach the !alue o the

property as i"pro!ed# a detailed study o alternati!euses is less critical (inerred analysis)%



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Property s "pro!ed 6ature o nalysis

the i"pro!e"ents contribute to !alue such that the !alue o the

i"pro!ed property is e0ual to or greater than the !alue o the land

as though !acant# the e&isting i"pro!e"ent(s) "ust be considered

as contributing to the propertyCs current highest and best use%

'&tent o the nalysis

Ho$ long and at $hat le!el (occupancy and rents) $ill the current

i"pro!e"ents peror"= (ti"ing issue)

Ho$ long $ill the current i"pro!e"ents contribute to the property !alue= (ti"ing issue)

7an the current i"pro!e"ents be re"odeled# reno!ated or

con!erted# or de"olished in the uture=

re"odeling# reno!ation# con!ersion or de"olition# $hat is the

ti"e ra"e=



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Proposed Properties

6ature o the nalysis

the assign"ent is to !alue the property at a proposed use# a

detailed "arketability study o that use is re0uired%'&tent o the nalysis

'!en $hen ne$# the proposed i"pro!e"ent "ay not be the

highest and best use o the land as though !acant%

lternati!e uses should be considered

detailed "arketability study o each alternati!e use "ay be

re0uired (unda"ental analysis)



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Testing Highest and Best lternati!es

7riteria

Physically Possible

?hat uses can be constructed on the site=

?hat alterations are physically possible=

9egal Per"issibility

'&isting restrictions as !acant

'&isting restrictions as i"pro!ed

7an e&isting restrictions be changed to allo$ "ore intense use=

?ill deed restrictions increase the propertyCs "arket appeal=

?hat legal attributes gi!e the sub,ect a "arket ad!antage=



1*

Testing Highest and Best lternati!es

7riteria# continued % % %

inancial easibility

7onsidering Risk and all costs to create and "aintain the use > >

?hat uses# as though !acant# produce a positi!e return to land=

?hat uses# as i"pro!ed# result in a positi!e present !alue=

-a&i"u" Producti!ity

?hich use results in the highest present !alue=

or 5acant 9and: ideal de!elop"ent speciied in ter"s o

density and style

or "pro!ed Property: the i"pro!e"ent re"ains as>is# is

added to# is re"odeled or reno!ated# con!erted to another use

or de"olished%



1

Reasonably Probable and de0uately

/upported spects o Highest and Best Use

TheoryTo select use alternati!es that should be tested

To judge the appropriateness o conclusions ro" the

application o each o the highest and best use criteria

Proble"

Deter"ining reasonable probability and ade0uate support is

let to the analystCs judgment

nitial ssess"entBased on "arket acceptability

nly practical to in!estigate alternati!e uses or land or

i"pro!e"ents $hen a reasonable probability e&ists or

potential alternati!e uses



1+

Reasonably Probable and de0uately

/upported spects o Highest and Best Use

Eoning

t ti"es# it is "andatory to in!estigate the reasonable

probability o a one change%

Relationship o Reasonable Probability andde0uate /upport to the our highest and best use

criteria

-ust address the reasonable probability o "arket

acceptance and de"and or the alternati!e usede0uate support or a reasonably probable# physically

possible and legal use is the irst issue addressed

-ust apply sound ,udg"entF



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Test the Peror"ance o a Property Use:

nor"ation and -easures

Physical Possibility

deter"ined by analysis o the property itsel

te"s considered in testing/ite characteristics

'&isting i"pro!e"ent characteristics



1;


nor"ation and -easures9egal Per"issibility

deter"ined by analysis o the public and pri!ate

restrictions

te"s considered in testing7urrent oning and other land use restrictions

Building 7odes

Pri!ate restrictions

Probability o "odiication or change o currentrestrictions (public and pri!ate)



1@

Rate actors or Possible Eone 7hange

Dactors 1 2 *

1% The site is not physically suitable or

the use currently allo$ed by oning# but

is physically suitable or the land

de!elop"ent orecasted or the sub,ect%

2% The use orecast or the sub,ect is

co"parable or can be designed to be

co"patible $ith ad,acent land uses%

*% The orecasted probable use o the

sub,ect conor"s to the cityGs

co"prehensi!e plan%

)% 7onditions in the sub,ect area ha!e

changed since the date the current

oning or the sub,ect beca"e acti!e%+% ( public good can be sho$n or the

use o the sub,ect property%

8% There is a history o appro!ed oning

changes to si"ilar properties in si"ilar

locations in other parts o to$n%

;% 6o nearby neighborhood association

is kno$n to oppose si"ilar oning

change re0uests that $ould

acco""odate the orecast use or the

(lternati!es

Analysis of Alternative UsesConsidering the Possibility of a Zoning Change



1A


nor"ation and -easuresinancial easibility'stablishing ade0uate support or a use

detailed "arketability study is needed

7ost o lternati!e Uses

De!elop"ent 7osts

9and ac0uisition and site de!elop"ent

7osts o obtaining necessary appro!als and per"its

Building 7osts

7onstruction and ndirects

'ntrepreneurial incenti!e

Holding 7osts

perating e&penses

7o"parison o alternati!e Uses



2


nor"ation and -easures

-a&i"u" Producti!ity

The inancially easible use that results in the highest present

!alue

7onidence in the conclusion "ay re0uire a or" o

reconciliation



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7onsideration o lternati!e Uses

5acant 9and

property producti!ity analysis (site# i"pro!e"ents#

legal# and location attributes) usually eli"inates "ost

alternati!es"pro!ed Properties

the property at its current use is orecast to lease up

or stay leased up that insures a !alue at or abo!e the

!alues o the other alternati!es > no urther analysis is

needed% 7urrent use is selected as highest and best

use%



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7onsideration o lternati!e Uses

De"olition lternati!e the !alue o the property in its current use is

signiicantly higher than the !alue o the land as though

!acant# the de"olition alternati!e is eli"inated ro"

urther study%nteri" and3or lternati!e Use o "pro!e"ents

"ust consider alternati!e uses or the ti"ing or de"olition

o e&isting i"pro!e"ents

5acant buildings or Properties operating $ith

e&tre"ely lo$ or negati!e 6

alternati!e uses or alternati!e operation o the current

i"pro!e"ents should be considered in detail



2*

-athe"atical Procedures

/electing and inancial decision "odel

Three characteristics "ust be realied by the

"odel

1% The "odel "ust consider the a"ount and ti"ingo all cash lo$s%

2% The "odel "ust consider the ti"e !alue o

"oney%

*% The "odel "ust consistently select the use that

$ill produce the highest inancial re$ard%



2


5acant land and land as though !acantCurrent inancial easibility is not a re0uire"ent

Use "ust eventually be inancially easible to be

considered

easibility Rent is the tool or deter"ining inancialeasibility

easibility rent is the rent necessary to ,ustiy ne$

construction

"arket rent is at or abo!e easibility rent#construction is ,ustiied

"arket rent is less than easibility rent# inancial

easibility can only be achie!ed i "arket rent is

gro$ing aster than e&penses and costs%



2+


"pro!ed Property7urrent inancial easibility is a re0uire"ent

Re0uires that the property !alue as-is "ust be

surpassed by the !alue o the property ater con!ersion#

reno!ation or alteration (7R) less the costs o 7R%lteration can result ro" e&cess or surplus land

lteration can "ean de"olition o i"pro!e"ents



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So That’s

Highest and Best Use Decisions

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RE3 Highest and Best Use Decisions.ppt

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