Valuation and Financing Practice Question
Question
A listing agent notices a potential compliance issue involving highest and best use. The parties need a practical answer before moving forward. Which answer best applies the rule? (Item 142)
Answer choices
- A. It can be ignored if the transaction is expected to close quickly.
- B. Recognize the legally permissible, physically possible, financially feasible, maximally productive use.
- C. It requires the licensee to favor the other party over the licensee’s own client.
- D. It is primarily a tax rule with no effect on brokerage practice.
Correct Answer
B. Recognize the legally permissible, physically possible, financially feasible, maximally productive use.
Explanation
The correct answer is B because highest and best use requires candidates to recognize the legally permissible, physically possible, financially feasible, maximally productive use. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.
Question details
- Difficulty: easy
- Domain: Valuation and Financing
- Objective: highest and best use