The standard used to evaluate and measure land use and commercial development has always been “What is the “highest and best” use of the site. I hate this term. To me it proposes two potentially opposite parameters. Taken separately, the definitions of these two descriptions seem clear – “highest” the most intensive and economically rewarding use, and “best” – the most preferable or optimal. “Highest” I’m OK with. “Best” bothers me a lot. It’s way too subjective. Who’s best is it? I may see an undeveloped piece of land that used to be a farm and think that the “best” use, in my opinion, is to be a farm. I like farms. Someone else will see the same plot of land and believe that it would be better used as building lots. Who’s right? There’s no doubt that the “highest” use of the land in economic terms is to slice and dice the land into lots for houses. But, is that the “best use”?
The study of Economics has traditionally been expressed in numbers. Statistics have always been used to prove or disprove theorems and hypotheses. But is it reasonable to think that there are things in life that are difficult to quantify? I believe so. Esthetics are real. Serenity, privacy, safety, tradition, and peaceful surroundings all have value; but how do you enumerate or place a monetary value on them? The market often reflects values, but what if the values are not the same for everyone? Personally, privacy is very important to me. Call me an old fashioned Yankee, but I don’t like to hear and see my neighbors any more than I have to – and I have great neighbors. Other folks like to be near others in a neighborhood or a development where the homes are almost touching. These folks tell me they feel safer and more a part of that community. Go figure. My “best” is not their “best” by any stretch of the imagination! As with any subjective value, there are different points of view. How do you develop a statistic for this? Good luck.
There have been new models developed to try to place value on some of these characteristics with a device called “social cost accounting”. This works somewhat well with values that affect the market and can be seen there. Views are a good example. A view is not a physical attribute to a plot of land that can be standardized and measured quantitatively with any degree of accuracy. It can’t be measured like an acre. It’s not a soil type. It’s not a physical asset like oil or minerals. But, it adds value. The quality of the water on a shorefront lot is similar. Some folks like a sandy shallow frontage and others like a steeper drop off.
This has gone little off course from my initial preposition, but it is still pertinent. “Highest” is pretty straightforward, but “Best” is anything but. So, what does this have to do with pricing your Real Estate? Remember that your “best” may not be my “best” and that value judgments come into play all the time. If you believe that your parcel of acreage is “best” used as undeveloped open land, you may consider a preservation strategy such as a conservation easement. If you don’t care, maybe it could be a development of new homes.
My point is that “HIGHEST” isn’t always everyone’s “BEST.”
Post written by: Kim Cedarstrom, Great Northern Real Estate and Business Advisors. Commercial/residential Realtor® with Roche Realty Group. E-mail: kcedarstrom@rocherealtygroup.
Kim Cedarstrom is a licensed residential and commercial Realtor© and consultant and president of Great Northern Real Estate and Business Consultants, an affiliate of Roche Realty Group offering a lakefront/residential real estate practice as well as commercial property and business sales services. Kim can be reached at email@example.com or directly at 603-520-6609.