Valuation
Highest and Best Use (HBU)
A concise definition for the California Real Estate Exam study guide.
Definition
The reasonably probable use of a property that is: (1) legally permissible, (2) physically possible, (3) financially feasible, and (4) maximally productive. Must satisfy all four tests.
Why it matters on the California real estate exam
Know the definition, recognize how the term appears in a fact pattern, and compare it with related concepts before choosing an answer.
Study this topic in context
Read the related chapter for the surrounding concepts, examples, and exam tips.
Chapter 6: Valuation & Appraisal →