“The value of your property isn’t always in the house you see — sometimes, it’s in the house (or six) that could be built there.” – Kathy Walsh, Appraisers Coalition of Washington
Ever wonder why a house down the street sold for way more than you thought it was worth — and not because it had a gold-plated kitchen faucet? In Seattle, and across King and Snohomish counties, something called “highest and best use” can mean the dirt your home sits on is worth more than the home itself.
With Seattle’s new middle housing laws, HB 1110, and shifting zoning rules, your property might not just be a home. It could be a development opportunity. And developers? They play by a different set of math rules — and those rules can put more money in your pocket than a traditional buyer ever would.
What to Expect in This Guide
Here’s what you’ll learn:
- What “highest and best use” really means in the Seattle real estate market — and why it’s not just a fancy appraisal term.
- How zoning changes and Middle Housing laws (including HB 1110) can quietly turn an average lot into a high-value development site.
- Why appraisals are suddenly unpredictable — featuring a real Seattle case study of two identical-zoned properties with completely different outcomes.
- Developer Math Rules — the simple formula builders use to decide what they’ll pay (and how it can beat retail offers by tens of thousands).
- Signs that a developer might pay more for your home than a traditional buyer — and how to spot them from the street.
- Tips for pricing and marketing your home to both traditional buyers and developers without overpromising.
- Broker’s Resource Toolkit — a curated set of mapping, permitting, and networking tools to evaluate and market high-use properties like a pro.
The Surprising Reason a Developer Could Outbid a Homebuyer
If you’ve been in Seattle long enough, you’ve seen it: one modest Craftsman sells to a young couple, the next one gets bulldozed and replaced by four sleek townhomes. Both homes were in the same neighborhood, but the sales prices told different stories.
That’s “highest and best use” in action.
Understanding the ‘Highest and Best Use’ Concept in Seattle’s Real Estate Market
Plain English Definition
“Highest and best use” means: What’s the most valuable legal thing you can do with this property? Not just what’s on it today — but what could be there.
In real estate terms, it’s the use that is:
- Physically possible – The lot is big enough, flat enough, and has the right access.
- Legally permissible – Zoning, building codes, and neighborhood restrictions allow it.
- Financially feasible – Someone could build it and make a profit.
- Maximally productive – Of all the possible uses, it creates the most value.
Why This Matters in Seattle Right Now
Seattle and surrounding cities are rewriting zoning rules to allow:
- Middle housing – duplexes, triplexes, and fourplexes in areas that were single-family only
- ADUs and DADUs – accessory dwelling units and detached accessory dwelling units (see Adding a DADU or ADU)
- Increased density near transit hubs – up to six units on a single lot in some cases
If your home sits on land where a developer can build more than one unit, your property’s highest and best use might be as a multi-unit development site. And that can drive your value up — sometimes by hundreds of thousands of dollars.
How Brokers and Sellers Look at This Differently
- Sellers usually think in terms of comparable homes — what similar houses nearby have sold for.
- Developers think in terms of land value — how much they can pay for your property while still making a profit on what they plan to build.
Here’s the catch: these two approaches can produce very different numbers.
A broker who understands both angles can run two CMAs:
- Single-family CMA – the “traditional” home value.
- Land value CMA – looking at nearby redeveloped lots, permit data, and potential build-out value.
(We’ll show you how that played out in a real-world appraisal example later.)
Seattle’s Current Development Climate
Seattle’s push for more housing, especially near transit, is like putting a turbocharger on the “highest and best use” concept. The Impact of Seattle zoning laws has made it possible for many more properties to be redeveloped — sometimes in neighborhoods that haven’t seen new construction in decades.
This means two things for homeowners:
- Even if your house is in great shape, it could be worth more as land.
- Developers might be willing to pay cash, skip inspections, and offer flexible terms — because speed matters to them.
The Appraisal Wild Card: Two Similar Homes, Two Very Different Results
Sometimes, the “highest and best use” conversation doesn’t just change who might buy your home — it changes how an appraiser values it. And that can catch both sellers and brokers off guard.
Here’s a real scenario based on recent zoning changes from HB 1110 and Seattle’s Middle Housing push:
Case Study
Two Seattle homes:
- Same zoning: allows up to six units due to proximity to transit.
- Same type of listing: marketed as single-family homes, not teardowns.
- Different results:
Home #1: Appraised “as is” — value based on its current use as a single-family residence.
Home #2: Appraiser refused the assignment, saying it required a commercial/multifamily appraisal due to the development potential.
What happened?
“Appraisers are looking not just at the property, but the neighborhood,” says Kathy Walsh of the Appraisers Coalition of Washington. “If the surrounding area shows signs of redevelopment — townhomes a few doors down, active building permits — that can push an appraiser toward evaluating the property at its highest and best use.”
Why It Matters for Sellers and Brokers
- A traditional appraisal might undervalue your property if its development potential isn’t factored in.
- A multifamily or commercial appraisal might show a much higher number, but could require a different lending path for the buyer.
- This unpredictability means pre-listing research is essential — especially in areas where redevelopment is already happening.
For a deeper dive into how appraisers handle these situations, check out Home value in Seattle assessed appraised market value.
Developer Math Rules
And developers? They play by a different set of math rules — and those rules can sometimes put more money in your pocket than a traditional buyer ever would.
Here’s the thing: most homebuyers think in terms of emotions, monthly payments, and how well the couch will fit in the living room. Developers think in terms of ROI (Return on Investment), FAR (Floor Area Ratio), and exit strategy.
When a developer looks at your property, they’re not just buying what’s there — they’re buying what could be built there. That means their offer price is tied to a very specific formula:
A simplified version of the developer formula looks like this:
After-Construction Value
– Total Construction Costs
– Permit & Holding Costs
– Desired Profit Margin
= Maximum Land Price
Example: Townhome Development in Seattle
Let’s say you own a home in a Seattle neighborhood that’s just been rezoned under Middle Housing laws to allow up to four units.
Developer’s projection:
- 4 new townhomes @ $825,000 each = $3,300,000 total sales
Estimated costs:
- Construction: $1,600,000
- Permit & holding: $200,000
- Desired profit margin (20% of sales): $660,000
Developer’s maximum land offer:
$3,300,000 – $1,600,000 – $200,000 – $660,000 = $840,000
Now compare that to the traditional homebuyer scenario:
- Your current house as-is appraises at $720,000.
- A retail buyer’s offer is limited by comparable sales and lender appraisals.
- Even if multiple buyers bid, the ceiling might be $750,000.
Bottom line: The developer’s math makes it possible to offer you $90,000 more than the best retail buyer could.
💡 Why this matters to sellers:
If your property has development potential, the “after-construction value” is the magic number — and it can push your sale price far beyond traditional comps. This is why a broker who understands both residential and development valuation methods can unlock opportunities most sellers never even consider.
How to Tell if a Developer Might Be Interested in Your Home
Here are some signs your property could catch a developer’s eye:
- Zoning allows for more than one unit (duplex, triplex, fourplex, or more)
- Large lot size relative to neighbors
- Proximity to transit hubs or commercial corridors
- Surrounding redevelopment activity — look for new townhomes or apartments nearby
- Favorable topography — flat, no major drainage issues
- Existing rental income potential from ADUs/DADUs (Adding a DADU or ADU)
Tips for Pricing Your Property in a Rezoned Seattle Neighborhood
- Run two CMAs — one for traditional buyers, one for land value.
- Check local permit data — see what’s being built nearby.
- Talk to builders and investors early — they can give you a sense of what they’d pay.
- Consider pre-listing inspections (Pre-listing inspections in Seattle) to avoid surprises.
- Stay realistic — a higher land value doesn’t mean every developer will pay top dollar; they still have to make the numbers work.
Broker’s Resource Toolkit: Seattle Development & Zoning Tools You Should Know
If you’re representing a property that might have redevelopment potential, you can’t just guess — you need data. The right tools will let you confirm zoning, spot trends, and speak confidently to both sellers and developers. Here’s your go-to list:
Zoning & Mapping Tools
- Seattle Department of Construction & Inspections Zoning Map – Get parcel-level details on zoning, land use overlays, and restrictions. You can confirm if a lot is zoned for more than one unit and whether there are height or setback limits.
- King County iMap – A powerful GIS tool that shows zoning layers, parcel boundaries, and assessor data for King County properties. It’s essential for checking redevelopment potential in areas outside of Seattle proper.
- Snohomish County PDS Map Portal – The Snohomish County equivalent, showing zoning, floodplains, critical areas, and other development overlays. Especially helpful if you’re working north of the city in Snohomish County real estate markets.
Permit & Development Tracking
- Seattle Services Portal – Search for active building permits, demolition notices, and land use applications. Great for spotting where new construction is already happening.
- King County Permitting Portal – Covers projects in unincorporated King County, including subdivisions, multifamily builds, and ADUs.
Networking & Buyer Outreach
- WAREI (Washington Real Estate Investors) – A private Facebook group where investors, builders, and brokers share off-market deals, zoning updates, and investment strategies.
- Master Builders Association of King and Snohomish Counties – An industry association that keeps builders (and connected brokers) up to speed on regulatory changes, builder sentiment, and market trends.
Additional Market Insight
For understanding the bigger picture, it’s not enough to know zoning — you need to see where the market is moving:
- Impact of Seattle zoning laws – How legislative changes like Middle Housing are reshaping development opportunities.
- King County real estate market analysis – County-wide trends that influence redevelopment profitability.
- Snohomish County real estate market analysis – Key data points for Snohomish County investment decisions.
💡 Pro tip for brokers: When you suspect a property might have redevelopment potential, pull data from these mapping and permit portals, walk the neighborhood to see what’s being built, and combine that intel with your market analysis. That’s how you can market a listing to both traditional buyers and developers without overselling its potential.
Frequently Asked Questions about Highest and Best Use in Seattle Real Estate
Q: What does “highest and best use” mean for my Seattle property?
A: It’s the most valuable legal use of your land — not necessarily the way it’s being used now. In some neighborhoods, that could mean replacing a single-family home with multiple units.
Q: How do I know if my property qualifies for redevelopment?
A: Check your zoning, lot size, and location relative to transit. Use tools like the Seattle Zoning Map or King County iMap, or consult with a local broker who understands development potential.
Q: Will a developer always pay more than a homebuyer?
A: Not always — it depends on market conditions, construction costs, and whether your property fits their building plans. But in many cases, redevelopment potential increases buyer competition.
Q: Could my appraisal come in higher if the appraiser values it for redevelopment?
A: Possibly, but it’s not guaranteed. Some appraisers use current use, others use highest and best use, and that can lead to very different numbers.
Q: Is selling to a developer faster?
A: Often yes — developers may pay cash, waive inspections, and work with flexible timelines. But they’ll still do due diligence, especially on zoning and environmental conditions.
Takeaways
- Highest and best use can mean your home is worth more as land than as a house.
- Zoning changes in Seattle, King County, and Snohomish County have expanded development opportunities.
- Appraisals are becoming less predictable — be prepared for different valuation methods.
- Brokers should run dual CMAs and tap into zoning/permit data.
- Developers are often willing to pay more when the numbers work in their favor.
Final Thoughts on Why Developers Might Pay More for Your Seattle Property Than a Homebuyer
For sellers, the takeaway is simple: your property’s true value isn’t just in the house that’s standing there today — it’s in what could stand there tomorrow. With Seattle’s zoning updates and Middle Housing laws reshaping entire neighborhoods, your lot might be far more valuable to a developer than to a traditional buyer. A broker who can run the numbers from both perspectives — residential and development — can open doors to offers you never thought possible.
For brokers, this is the time to sharpen a skill set that’s becoming essential in our market. Knowing how to read zoning codes, spot underbuilt lots, and reverse-engineer land value from redevelopment comps can make you the go-to resource for sellers sitting on hidden goldmines. Add in relationships with builders, investor networks, and the right valuation tools, and you’re not just selling houses — you’re selling future potential.
The real winners in this market will be the sellers who team up with brokers fluent in both “homebuyer” and “developer.” In many cases, that’s the difference between taking the safe, standard offer and setting a new record for the neighborhood.
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