Highest and best use refers to the most profitable legal use of a property, considering its physical characteristics, location, and zoning regulations. It is crucial in real estate appraisal and investment analysis, as it determines how a property can generate the maximum return on investment. Understanding this concept is essential for determining the property's value through various methods, adhering to land use regulations, evaluating unique properties with special functions, and assessing investment performance through risk-adjusted returns.
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