In commercial real estate appraisal and valuation, the highest and best use of a property is the use a property that will bring the highest value to stakeholders. When an appraiser attempts to determine the highest and best use of a property, they must not only examine its current use, but must also look into potential alternative uses. In regards to commercial real estate investing, the highest and best use typically means the use with the highest risk-adjusted returns
If you want to purchase a commercial property, you’ll almost always need to get an appraisal first. An appraisal is a professional estimation of the market value of a property, which needs to be conducted by a certified appraiser in the area which the property is located. In most cases, commercial real estate lenders require an appraisal before they approve a borrower for a loan, since they need to determine the value of a property in order to accurately calculate its loan-to-value ratio and other important financial metrics.