What are the three conditions necessary for the highest and best use analysis?

The correct answer highlights the three essential conditions necessary for determining the highest and best use of a property: legally permissible, physically possible, and financially feasible.

Legally permissible refers to the zoning regulations and legal restrictions that dictate what can be built on a property. This analysis checks if the intended use complies with local laws, zoning ordinances, and other regulations.

Physically possible involves assessing the property's characteristics, such as its size, shape, access to utilities, and topography, to determine whether the proposed use can be adequately realized in a practical manner.

Financially feasible examines whether the proposed use can generate enough income to justify the costs of development or operation. This condition ensures that the investment in the property is sound and will provide reasonable returns.

Together, these three conditions create a comprehensive framework to analyze the potential use of a property, ensuring that the recommended usage is not only optimal in theory but also viable in practice. Understanding these concepts is crucial for real estate professionals as they conduct market analyses and help clients make informed decisions.