USPAP – Highest and Best Use

USPAP.  Highest and best use.  Really, what do they have to do with each other?  On the reporting forms, highest and best use is just a box to check, right?  Yes, it is just a box to check.  But the wise appraiser puts a check into that box only after doing all of the market analyses necessary to support checking that box.  And, what are all of those market analyses?  They are the three approaches to value (unless there is a killer market-based and market-supported for omitting one.  And even that decision takes a whole truckload of analyses!).

When it comes to USPAP, highest and best use is a topic qualifying and continuing education do not cover in sufficient depth.  This is unfortunate since a proper highest and best use analysis is central to a credible value opinion.  How central is it to that opinion?  SR1-3, USPAP’s Marketability and Highest and Best Use Standards Rule is in the middle of the six Standards Rules in USPAP.  You can’t get much more central than that! And a USPAP-compliant highest and best use analysis is easy to follow.  SR1-3 lists in order the stuff the appraiser is to analyze.  How can you get any more straightforward than that?

So USPAP, highest and best use, and the appraisal process are all related.  They are so related, highest and best use is right in the middle of that process!  Even though you already knew this, this template will help you explain to your clients and intended users how you arrived at that conclusion, the market-support for it, and why you formed that opinion.  After all, the key to a credible appraisal is the quality of its analyses.  When your highest and best use conclusions are credible, so is your value conclusion.  Thanks for reading!