By Evan Zener, Metro Land Pro with RE/MAX Equity Group — Oregon Land Specialist
When landowners hear “highest and best use,” many assume it means the use that allows the most units. More density must mean more value. But that’s not how the market actually works. The use that looks most profitable on paper doesn’t always translate in the real world if demand for that product isn’t strong enough.
Here’s what landowners often misunderstand about highest and best use, and how it impacts what land is actually worth.
What Is Highest and Best Use?
Highest and best use is simply the use that makes your land worth the most in the real world. Land is ultimately worth what a buyer can realistically do with it, and your goal is to identify the use that lets your property sell for the highest price.
To qualify, a use has to meet four established criteria: legally allowed, physically possible, financially feasible, and supported by demand. That last one is where things break down. A use only matters if builders and buyers actually want it.
What Sellers Often Get Wrong About Density
The mistake happens when sellers assume buyers want the maximum density allowed on paper.
Developers don’t build what’s theoretically allowed. They look at which product type creates the strongest overall outcome for that site based on demand, pricing, absorption, and profit. That’s why a property zoned to allow up to twenty townhomes might still be worth more as ten detached homes, because the detached product performs better once you look at how the market actually responds to it.
The mistake isn’t underestimating zoning potential. It’s assuming the use that creates the most units automatically creates the most value, even when the market points in a different direction.
What Zoning Allows vs. What the Market Will Support
A good real-world example is a twenty-acre listing I had on the outskirts of a growing city. On paper, the zoning allowed up to ten attached units per acre, so the seller assumed the site would be most valuable as a high-density project, somewhere in the range of 180 to 200 townhomes.
Before we priced the land, we ran a townhome scenario, because that was the maximum density allowed. But once we began validating that product type with builders who actually build in that submarket, the feedback was unanimous. Homebuyers out there wanted yards, garages, more privacy, and more space. Builders made it clear that detached homes would sell faster, sell for more, and create a stronger overall return, and that absorption for a large townhome project in that location would be too slow to support it.
So instead of valuing the property based on a high-density townhome layout, the realistic number was roughly six single-family lots per acre, about 120 total, instead of the 180 to 200 attached units the townhome scenario suggested. The detached layout created a stronger outcome once you factored in demand, pricing, and how buyers in that area actually shop for housing.
The Real Point of Highest and Best Use
Highest and best use isn’t about forcing the largest project or assuming more units automatically mean more value. It’s about aligning your property with what the market will actually support, so you can position it in a way that brings the strongest price. When you understand what builders will actually develop, based on what homebuyers in that area want, you avoid unrealistic expectations and put yourself in the best spot to attract real offers.
Need Help?
If you want help identifying which use or product type will support the strongest price for your property in today’s market, I’d be happy to walk you through it. Getting clear on what builders will actually develop on your site is one of the most important steps toward a real, solid offer.
Evan Zener — Metro Land Pro with RE/MAX Equity Group
Licensed Real Estate Broker in Oregon
503-208-5298