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Highest and Best Use
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In order to appraise the property, the appraiser must first determine the highest and best use (or HABU) of the property. It is a process to determine the use of the property which produces the highest value for the land, as if vacant. There are four steps to the process.
1. The appraiser determines the nature of the property and its legally permissible use.
2. The appraiser chooses which permissible use is physically possible for the property.
3. The appraiser determines out the physical uses which one is the can be economically supported by the property.
4. Out of the financially feasible options, the appraiser determines the use that is maximally productive for the site.
This process must be done twice, once in the as-is state and the other as if it were vacant. An
appraisal of the property assumes the owner or buyer will employ the property in its highest and best use, therefore value the site accordingly.
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