Question

A single parcel is valued at $450,000. Zoning allows it to be subdivided into 8 lots and it is estimated that each lot could sell for $50,000. Site development costs (sewer, grading, road, etc.) would cost $50,000. What is the highest and best use?

Answer 1

Selling the single parcel without dividing it into lots

Step-by-step explanation:

There are three possible uses for the parcel: selling the parcel, selling the lots without development, and selling the lots with development.

Selling the parcel would earn $450,000

Selling the lots without incurring in development costs:

8 lots x $50,000 selling price per lot = $400,000

Selling the lots while incurring in development costs:

$400,000 - $50,000 = $350,000.

Therefore, the best option is to sell the single parcel, without dividing it into lots.