In a residential appraisal, when is the highest and best use as improved likely to differ from the highest and best use as if vacant?

The highest and best use as improved represents the most profitable use of a property in its current state, taking into consideration existing structures and how they may impact value. In contrast, the highest and best use as if vacant considers what the land could be used for if it were completely cleared of existing improvements.

When a neighborhood is in transition, it often indicates that the area is undergoing significant changes in zoning or demographics, which could impact property values and potential uses. For example, a residential property in a formerly industrial area that is now being developed with new residential or commercial properties might have a different highest and best use based on its potential future value compared to its current use.

If a neighborhood is shifting towards higher density residential or mixed-use developments, this transition can lead to a situation where the best use as improved (keeping the existing structure) may not yield the highest value, while the best use as if vacant could take advantage of new zoning or development opportunities.

Therefore, recognizing transitions in a neighborhood is key to understanding how the highest and best use might differ based on current market conditions and prospective future uses.