PSI Oklahoma Real Estate Practice Test

What defines the highest and best use of a property?

1. An illegal use that garners high income

2. A use that maximizes legal, physical, financial feasibility, and productivity

3. A use that is temporally advantageous

4. Only a residential use

The correct answer is: A use that maximizes legal, physical, financial feasibility, and productivity

The concept of highest and best use refers to the most profitable use of a property that is legally permissible, physically possible, financially feasible, and maximally productive. This definition encompasses several critical factors that determine the value and utility of the property. When evaluating a property, it's essential to consider what uses would not only comply with zoning laws and regulations but also take full advantage of the property’s physical characteristics, such as its location, size, and shape. Additionally, the highest and best use must be economically viable—meaning it should generate the most financial return over time compared to other potential uses. This perspective ensures that the investment in a property is sound and that it aligns with market demand and trends. Therefore, to define the highest and best use effectively, all four determinants—legal, physical, financial, and productivity—must be fulfilled, making this answer the most comprehensive and accurate representation of the concept.