Читать книгу Advanced Issues in Property Valuation - Hans Lind - Страница 15

Both IVSC (2019 ) and Appraisal Institute (2013 ) use the concept of ‘Highest and best use’. IVSC (2019 , p. 25) writes, ‘The market value of an asset will reflect its highest and best use’ and this is explained in terms of the use that maximizes its potential (given what is possible, legally permissible and financially feasible). Similar formulations can be found in Appraisal Institute (2013 , p. 42).

There are problems with this concept and our recommendation is that it should be used with a great degree of caution when market value is discussed. The requirements for empirically extracted ‘evidence’ should be high if, or when, this concept is claimed to have affected an estimated market value‐figure. As will be returned to in Chapter 8, the typical situation in a market is that actors have different knowledge, different expectations and different plans for a specific property. One actor may see possibilities that other actors initially are not aware of. An example discussed in Chapter 7 is that one investor sees that a certain building can be made green with a rather small investment. More theoretically, this can be described in terms of different views on the real options that a property has. In a market, actors typically gain by not giving away information and not telling others what their plans are. Investors may have plans that valuers are not aware of. If only one actor is aware of certain profitable opportunities that ‘highest and best use’ will not affect the bids of others are therefore not the price if the property is sold by a standard English auction, where bids are presented in ascending order until there is only one bidder left.

In a world of uncertainty, expectations are very important for what an actor is willing to pay. This means that even if a majority of investors and valuers believe that use A is the highest and best use, a very optimistic actor that believes that B is the highest and best might be willing to pay more.

These arguments imply that it may be questionable to say that the market price reflects the highest and best use, and the formulation does not add anything to the definitions discussed above. But it is very important to think about options when valuing a property and how this can be done is discussed in the next chapter.