real estate appraisal term meaning the legally and physically possible use that, at the time of appraisal, is most likely to produce the greatest net return to the land or buildings over a given period.
an appraisal term meaning the legally, financially, and physically possible use that, at the time of appraisal, is most likely to produce the greatest net return to the land and/or buildings over a given period. May be applied to property as if vacant or as improved.
Example: A vacant lot in the city is valued at $50,000 if developed for a single-family house, $100,000 as an apartment building $125,000 as a retail store, and $150,000 as a small chemical processing plant. Because of restrictions on water supply and disposal, the chemical plant is not physically or legally possible. zoning laws prohibit commercial development. Therefore, the highest and best use of the lot is for an apartment building.
