What is defined as the most profitable, legal, and possible use of a property?

The term that accurately describes the most profitable, legal, and possible use of a property is known as "highest and best use." This concept is crucial in real estate appraisal and valuation, as it provides a benchmark for determining the potential value of a property based on its most advantageous use that is legally permissible, physically possible, financially feasible, and maximally productive.

The highest and best use principle considers not only what is currently permitted under zoning and planning regulations but also the physical characteristics of the property, market demand, and financial implications. By identifying this optimal use, appraisers and investors can assess the property’s value more precisely, guiding decisions related to development, investment, and sales.

In contrast, depreciated value refers to the reduction in value due to wear and tear or obsolescence. List price pertains to the price at which a property is offered for sale, which may not reflect its true market value. Functional obsolescence refers to the loss of value due to outdated features or designs that do not meet current market standards. Each of these terms addresses different aspects of property valuation and market behavior but does not encapsulate the full concept of maximizing a property’s potential like the highest and best use does.