Highest and Best Use
The legally permissible, physically possible, financially feasible, and maximally productive use of a property, used as the basis for appraised value.
Quick flashcard
What does Highest and Best Use mean on the Texas real estate exam?
Answer: The legally permissible, physically possible, financially feasible, and maximally productive use of a property, used as the basis for appraised value.
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Highest and Best Use definition
Highest and best use is the use of a property that is legally permissible, physically possible, financially feasible, and maximally productive. Appraisers determine it first, because value is estimated based on that use rather than the current use.
A property's current use is not always its highest and best use. A small house on a commercially zoned lot may be worth more for redevelopment than as a residence.
Source basis
Definition checked against the official sources below on .
On the exam
Exam trap
Tested in
Value & Appraisal (11 of 80 National)
From definition to recall
See this term inside a real exam question.
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Try 5 free questionsThis definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.