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[07b] Park Terrace - Assessment Appraisal
Summary Appraisal Report Single Family Residential 20170 Huntington Way Property: Credit River Township, MN 55372 Ratwik, Roszak & Maloney, P.A. Attn: Jay Squires, Attorney Prepared For: nd 760 2 Avenue South, 300 U.S Trust Building Minneapolis, MN 55402 Date:December 2, 2008 Prepared By: William R. Waytas, Appraiser NAGELL APPRAISAL & CONSULTING 7515 Wayzata Boulevard Minneapolis, MN 55426 Telephone: (952) 544-8966 Fax No. (952) 544-8969 File # V0906001 ii NAGELL APPRAISAL & CONSULTING 7515 Wayzata Blvd. #115 Minneapolis: 952-544-8966 Minneapolis, MN 55426 St. Paul: 651-209-6159 Central Fax: 952-544-8969 Established in 1968 ____________________________________________________________________________________________________________________________________________ Ratwik, Roszak & Maloney, P.A. July 16, 2009 Attn: Jay Squires nd 760 2 Avenue South, 300 U.S. Trust Building Minneapolis, MN 55402 Dear Mr. Squires: summary appraisal report In accordance with your request, a has been made on the following described property: Subject Property: 20170 Huntington Way Credit River Township, MN 55372 The property is legally described herein. The appraisal assumes that the property meets all current environmental standards. The appraisal analysis and conclusions are subject to as-is certain limiting conditions and assumptions described herein. It is our opinion of the mark valueDecember 2, 2008 as of , is: OPINION OF MARKET VALUE BEFORE (Existing Older Road): $431,000 OPINION OF MARKET VALUE AFTER (Road Re-Construction): $443,000 Benefit For New Road: $12,000 Our company has 10 employees, has been in business since 1968 and has sufficient knowledge, experience and resources to competently complete this assignment. The accompanying report contains data secured from my personal investigation and from sources considered to be reliable; however, correctness is not guaranteed. To the best of my knowledge and belief, the statements contained in this report are true and correct. Neither my employment to make this appraisal, nor the compensation, is contingent upon the value reported. This report has been prepared in conformity with the code of professional ethics and standards of professional appraisal practice of the Appraisal Institute and appraisal standards set forth by Uniform Standards of Professional Appraisal Practice. Sincerely, William R. Waytas, SRA, CRP Certified General MN 4000813 ________________________________________________________________________________________________________________________________________ www.callnagell.com iii TABLE OF CONTENTS General Information Page Summary of Important Facts and Conclusions ................................................................... 1 Introduction ........................................................................................................................ 2 Intended Use, Date of the Appraisal ................................................................................... 2 Scope of the Appraisal ....................................................................................................... 3 Property Rights Appraised, Personal Property ................................................................... 4 Identification, Real Estate Taxes ........................................................................................ 5 Subject Sales & Building History ........................................................................................ 6 Descriptive Data Regional Data .................................................................................................................... 7 Regional Map ..................................................................................................................... 8 City & Neighborhood Description ....................................................................................... 9 City Map & Data ............................................................................................................... 10 Analysis Before Project Site Description ................................................................................................................ 12 Zoning .............................................................................................................................. 13 Plat Map / Flood Map / ..................................................................................................... 15 Description of Improvements ............................................................................................ 18 Aerial Photographs .......................................................................................................... 20 Subject Photographs ........................................................................................................ 21 Highest and Best Use ...................................................................................................... 26 Cost Approach ................................................................................................................. 28 Income Approach ............................................................................................................. 28 Sales Comparison Approach ............................................................................................ 29 Reconciliation .................................................................................................................. 45 Project Description Project Description ........................................................................................................... 47 Analysis After Project Site Description ................................................................................................................ 48 Description of Improvements ............................................................................................ 49 Highest and Best Use ...................................................................................................... 51 Cost Approach ................................................................................................................. 53 Income Approach ............................................................................................................. 53 Sales Comparison Approach ............................................................................................ 54 Reconciliation .................................................................................................................. 70 Summary of Before and after Values ............................................................................ 71 Definitions ........................................................................................................................ 72 Environmental & Structural Issues ................................................................................... 72 Certification ...................................................................................................................... 73 Extraordinary Assumptions & Hypothetical Conditions ..................................................... 74 Assumptions and Limiting Conditions ............................................................................... 74 Curriculum Vitae .............................................................................................................. 77 Addenda .......................................................................................................................... 66 SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS General Description: Single Family Home Appraisal Report: Summary Report Current Use: Single Family No, see rear of report for details Special Assumptions: Site Size: 473,497 SF (10.87 acres, per county) Building Size: 2,244 SF(per appraiser measurements) Quality/Condition: Average to Good/Average to Good Age: 1986 Zoning: RR-2, Rural Residential Single Family District Highest and Best Use: Current residential use Property Rights Appraised: Fee Simple Interest Personal Property: No personal property included Before Value: $431,000 After Value: $443,000 Benefit For New Road: $12,000 Nagell Appraisal & Consul-544- 1 INTRODUCTION This appraisal report reflects the data found and the conclusions estimated from an appraisal of a residential property located at 20170 Huntington Way, Credit River Township, Minnesota. Before Value: Reflects market value before the project; A single-family home with frontage/access on a paved road in fair condition and with private utilities (well & septic). Front portion of report. After Value: Reflects market value after the project; A single-family home frontage/access on a paved road in good condition and with public utilities (water & sewer). Rear portion of report. The difference in the before and after values will reflect the benefit to the subject property (if any) as a result of the street improvement project. NOTE: Appraised value in this report does not take into account the possibility of a lot spilt. INTENDED USE OF REPORT determine the benefit, if any, to the subject property as The function of the appraisal is to a result of the street improvement project. A before and after market value will be determined. sole use This appraisal assignment was requested by the named client/owner for its . No party, other than the client, may use or rely upon any part of this report without the prior written authorization of both the named client and the appraiser. This report is not valid blue ink unless it contains the original signatures in . Any unauthorized third party relying upon any portion of this report does so at its own risk. DATE OF THE APPRAISAL December 2, 2008 The effective date and inspection date is and reflects the as-is value The date of the report is July 7 through July 14, 2009. Nagell Appraisal & Consul-544- 2 SCOPE OF THE APPRAISAL REPORT USPAP defines Scope of Work as: The type and extent of research and analyses in an assignment. For each appraisal, appraisal review and appraisal consulting assignment, an appraiser must: 1) Identify the problem to be solved, 2) Determine and perform the scope of work necessary to develop credible assignment results; and 3) Disclose the scope of work in the report. 1) Provide a reliable opinion of market value as it relates to the intended use. Per assignment request (see addenda for engagement letter), the following degree of Summary research and analysis has been made. The narrative format used is a 2) Report , which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(b) of USPAP. See individual approaches for further detail. The scope of work for this appraisal includes: a) Property Identification: Public record, plat maps, zoning maps and aerial photographs were used to identify the subject property. b) Property Inspection: An inspection of the subject property and neighborhood and a review of the easement exhibits were made by the appraiser. Physical factors: Based on property inspection and conversations with the client, city and county officials. Lot size is based on county information. Economic Factors: Consisted of gathering of information from market experts, city and/or county offices, and internet about the region, community, neighborhood, zoning, utilities, and any pending projects in the area that may affect the subject property. c) Extent of Data Researched: Sales data of competing properties within the subject market area were given primary consideration. The most relevant data is 3) used in this report. Sources include, appraiser data files, assessor, internet, developers, agents, MLS, periodicals, in-office library, etc. In addition, during the course of appraisal practice and of this appraisal process, the appraiser has had ongoing discussions with market participants (buyers, sellers, property managers, real estate agents/brokers, etc.) and/or viewed market data in relation to how the current real estate market may impact the subject value. The appraiser has not researched the title or ownership records. d) Type and Extent of Analysis Applied at Opinions or Conclusions: An extensive review of market data was performed. The most recent, similar and proximate data has been used. The data used will be adjusted on a grid. Appropriate and reasonable: collection, verification, analysis and viewing have been performed in the valuation approaches, given the purpose and intended use of the report. A final value opinion will be discussed and correlated. The appraiser accepts full professional responsibility for all of the analyses and conclusions contained within this report. The data used was obtained from sources considered credible, yet its accuracy is not guaranteed. Nagell Appraisal & Consul-544- 3 PROPERTY RIGHTS APPRAISED Real property ownership consists of a group of distinct rights. There are two primary property rights, Fee Simple and Leased Fee (as defined by The Appraisal of Real Estate, 13 Edition, Appraisal Institute). Fee Simple Interest: Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. Note: This would typically reflect an owner-occupied property. When the property rights appraised are the unencumbered fee simple interest of the real estate, the appraised value is subject to normal easements for drainage, public streets and utilities, if any. The effect of any existing mortgage or delinquent taxes on the subject property has not been considered in this appraisal. Leased Fee Interest: The ownership interest held by a lessor (landlord), which includes the right to the contract rent specified in the lease plus reversionary right when the lease expires. ty is considered a leased fee interest regardless of the duration of the lease, specified rent, the parties to the lease, or any of the terms in the lease contract. A leased property, even one with rent that is consistent with market rent, is appraised as a leased fee interest, not as fee simple interest. Even if the rent of lease terms are not consistent with market terms, the lease fee interest must be given special consideration and th is appraised as a leased fee interest (The Appraisal of Real Estate, 13 Edition, Page 114). property rights appraised are the unencumbered Due to the nature of the assignment, the fee simple interest of real estate. Since the subject property is considered vacant land, fee simple interest is appropriate. PERSONAL PROPERTY No business value, FF&E or personal property Appraised value reflects real estate only. is included in the appraised value. Nagell Appraisal & Consul-544- 4 IDENTIFICATION 20170 Huntington Way Street Address: Credit River Township, MN 55372 Í»½¬óîé Ì©°óïïì ο²¹»óðîï ïðòèé ßÝ ÐñÑ Ûïñî ÒÉïñì ÝÑÓ ÒÛ ÝÑÎô ÍÉ ïïéìòèëùô ÒÉ éìçòçéù ÌÑ ÐÑÞô ÍÉ Legal Description: ïðèòïïùô ÝËÎÊÛ ÍÛ ïïéòïéùô ÍÛ ïëçòðíùô É êíèòìëù ÌÑ É Ô×ÒÛô Ò ïïïðòïéù ÌÑ ÝÔ ÑÚ ÝÑ ÎÜ ïîô ÝËÎÊÛ ÍÛ çìéòêìùô ÍÛ çîòëîù ÌÑ ÐÑÞ ø°»® ݱ«²¬§÷ The County PID #: 04-927003-3 The Fee Owner: Michael & Julie Skovran Census Tract #: 810 REAL ESTATE TAXES 2008 Tax payable: $4,659.72 Special assessments, fees, etc: $4.28 Total tax, special assessments, fees, etc: $4,664 City Assessor's Value 2008 Value (payable 2008) Land: $189,000 Building: $323,300 Total: $512,300 Comments: The tax rate for the subject property is 0.91%. The subject is within the typical range. Appraised value assumes any and all special assessments paid in full and that there are no delinquent taxes due. Nagell Appraisal & Consul-544- 5 SUBJECT BUILDING, SALES & LEASE HISTORY Building History Per county records, the subject building was constructed in 1986. History: Addition in 2006, added master bedroom, bath, and closet. Full Updates: basement below as well. Current Use: Single Family Residence. Sales History Identification: 04-927003-3 Sale Price: N/A Close Date: N/A Buyer: N/A Seller: N/A Terms: N/A Source: N/A Comments: No reported sales within the past 5 years. Lease Data Current Lease: N/A Stabilized: N/A Leasehold Interest: N/A Nagell Appraisal & Consul-544- 6 REGIONAL DATA Metro Area: Minneapolis, St. Paul and the surrounding communities are known as the Twin Cities Metropolitan Area (TCMA). Slightly over half of Minnesota's residents live in this area. In both of the fully developed central cities--Minneapolis and St. Paul--the population has declined due to smaller household sizes, yet growth in other areas of their counties has been more than offsetting. Below is detailed where this growth has occurred: 1990 2000 2006 Est. % of -Median County Census Census Census Total Change Income* Anoka 243,641 298,084 327,005 11.0% 9.7% $61,634 Carver 47,915 70,205 87,545 2.3% 24.7% $72,998 Dakota 275,227 355,904 388,001 13.1% 9.0% $66,467 Hennepin 1,032,431 1,116,200 1,122,093 37.8% 0.5% $55,996 Ramsey 485,765 511,035 493,215 16.6% (3.5%) $49,898 Scott 57,846 89,498 124,092 4.2% 38.7% $78,106 Sherburne 41,945 64,417 84,995 2.9% 31.9% $61,313 Washington 145,896 201,130 225,000 7.6% 11.9% $73,491 Wright 68,710 89,986 114,787 3.9% 27.6% $59,615 Total 2,399,376 2,796,459 2,966,733 100.0% 6.1% $64,391 Median Incomes reported on this page are for 1999 using 2000 Census data. The national median income is $42,000. Subject County: The subject is located in Scott County, which grew by 38.7% between 2000 and 2006. The subject is located in the western portion of the county in Credit River Township. thth Economic Data: The Twin Cities is the 13 largest market in population and the 11 in retail sales in the nation. In 2005, the estimated median household income for the nine county Twin Cities Metro Area average was $64,391. The above grid reflects a breakdown of median household income for the 9 county Twin Cities Metro Area. The subject county of Hennepin is below the Metro average. The unemployment rate for June 2009 is around 9%, which is slightly above the national average. The current residential interest rates, for a typical 30 year mortgage, are around 5% to 7%. Commercial rates are around 6% to 7.5%. Rates are expected to be relatively stable over the next year. The current state of the macro economy is poor. The housing market in most regions is down 5-30%+ over the past 2 years, with foreclosures at historic highs. The commercial real estate market has been somewhat more stable, but has experienced a gradual softening as the impact of the residential housing market spreads throughout the economy. The major stock markets in the United States and around the globe have experienced double digit declines of 20-40% over the past several weeks. Action is currently being taken by the US Government and other global authorities to mitigate the crisis and stabilize national and world economies. Nagell Appraisal & Consul-544- 7 REGIONAL MAP/DATA Greater Twin Cities Metro Area Market Vacancy 2001 Current Market 2002 2003 2004 2005 2006 2007 2008 Trend Market Office 12.7% 17.0% 18.9% 18.3% 16.1% 15.2% 15.2% 15.4% Soft Stable Industrial 13.3% 14.0% 15.2% 15.5% 13.0% 13.0% 11.9% 12.4% Stable Improving Retail 6.8% 4.5% 5.0% 7.8% 6.3% 2.9% 6.9% 7.6% Stable Declining Apartments N/A 6.6% 7.6% 7.3% 6.1% 4.7% 4.2% 3.9% Good Improving Current Cap Rates 2001 2002 2003 2004 2005 2006 2007 2008 Trend Market Office N/A N/A 10.4% 9.0% 8.0% 7.3% 7.1% 7.4% Stable Increasing Industrial N/A N/A 10.6% 9.3% 9.2% 7.8% 6.9% 7.2% Stable Increasing Retail N/A N/A 9.9% 7.9% 7.9% 5.1% 6.6% 7.1% Stable Increasing Apartments N/A N/A 8.6% 7.4% 7.5% 6.0% 5.5% 6.7% Stable Increasing Source: NORTHMARQ Compass July 2008 Nagell Appraisal & Consul-544- 8 CITY & NEIGHBORHOOD DESCRIPTION Close in suburban Type of neighborhood: Percent built-up: 50% developed Stage of Development: Fully developed Neighborhood boundaries: Credit River Twp. Predominant type Single family 48%, 2-4 family & multi-family 0%, & conformity: commercial/industrial 2%, vacant/park 50% Reputation of the area: Average Typical property age: New to 50+ years, predominantly 10 years Subject Market: Single Family Residential Lots Sales: $75,000 to $200,000+ per acre Home Sales: $300,000 to $800,000 + Subject Market: Stable Neighborhood Trend: Gradual increase in values over time Detrimental influences: No major apparent Comments: Credit River is located about 40 minutes south of Downtown Minneapolis. Major Roads include I-35 and County Road 70. The township consists of rolling sloping land that is partially wooded with scattered ponds and creeks. Homes are typically on 2 to 10+ acre sites and are generally average to good quality. In this price range a typical buyer expects paved roads. Legends Golf Course in within the township. Most support facilities are within 10-25 minutes. No apparent adverse influences. Market Overview: The appraiser has considered recent publications, news articles and comments from market participants. In general, the subject market is declining in the past 18 months. Construction labor costs are softer however, material costs appear to be rising, overall construction costs are very competitive from what they were 1 to 2 years ago. The overall economy and gas prices have impacted the subject market due to distance to major employment centers. Nagell Appraisal & Consul-544- 9 CITY MAP/DATA Subject City: The median income for Credit River Township as of 2000 was $75,363, which is slightly less than the county average. The United States Census population estimate for Credit River Township as of 2007 (estimated) was 4,610, up from 3,895 in 2000. Credit River Township Single-Family Residential Market Year # of Sales Avg. Sales Price Annual % Change 9 4.99% 2006 $761,877 (13.34%) 2007 9 $660,167 (12.09%) 2008 20 $580,358 (22.64%) 2009 (YTD) 21 $448,948 The residential housing market is declining in the subject neighborhood. Over the past two years (for this report 2007-2008), the subject market has declined an average of about 1.0% per month. Nagell Appraisal & Consul-544- 10 BEFORE ANALYSIS Nagell Appraisal & Consul-544- 11 SITE DESCRIPTION Rectangular, see plat map. Dimensions: Gross Site Area: 473,497 SF or 10.87 acres, per county Topography/Shape/Low: Sloping / Irregular / None noted Soil conditions/Drainage: Assumed to be Stable / Appears average Utilities: Electricity/Gas Average Water/Sanitary Sewer Well / Septic Off-Site Improvements: Street/Curb/Gutter: Older Asphalt/None Sidewalk/Alley: None / None Street Lights: None Storm Sewer: Surface Access to site/Number: Huntington Way Frontage: Huntington Way and Credit River Boulevard View: Average Flood hazard zone: No, see following map Apparent Easements: Standard Utility & Drainage Encroachments: None apparent Unusual Conditions: None Apparent Use: Single Family Home Building Location: Eastern property line Surplus/Excess Land: None Functional Adequacy: Average North: Residential South: Residential Surrounding Uses: East: Residential West: Residential Distance to Major Road: About 2 miles to I-35 Comments: The subject is located in a residential small acreage area. The subject has good views of the county side and surrounding properties. No apparent unusual conditions, adverse easements or encroachments are noted. Most homes in the area are average to good quality. Nagell Appraisal & Consul-544- 12 ZONING Subject Zoning & Uses RR-2, Rural Residential Single The subject is zoned Family District. Subject Zoning: Primary Permitted Uses (per RR-2: Public or government utility uses, parks, recreation county): areas, railroad right of way, limited livestock raising, residential care facility, and single family detached dwelling. Major Restriction/Requirements in Typical setbacks and land to building ratio requirements. this District: Use: The subject is considered a legal and conforming use. Nagell Appraisal & Consul-544- 13 ZONING MAP SUBJECT Nagell Appraisal & Consul-544- 14 PLAT MAP Nagell Appraisal & Consul-544- 15 FLOOD MAP Nagell Appraisal & Consul-544- 16 SKETCH *Sketch is approximate Nagell Appraisal & Consul-544- 17 DESCRIPTION OF IMPROVEMENTS Building Data Type of Building: Single Family Residential Number of Buildings/Stories One / Two Above Grade Finish: 2,244 SF (per appraiser measurements) Year Built: 1986 Quality/Condition: Average to Good / Average to Good Type of construction Structure: Wood Frame Roof Surface: Asphalt Shingle Exterior Walls: Lap Vinyl Doors/Windows: Average/Double Hung Casement Basement: Concrete Block Ceiling Height: Typical Mechanical/Plumbing/Insulation HVAC: Forced Air/CA Electrical/Plumbing: 200 amp / Copper Hot water heater: Average Elevator/Insulation: None / Assumed average Energy Management System: None Security System: None Computer Network System: None Wired Phone System: Yes Nagell Appraisal & Consul-544- 18 Description of Improvements continued Interior Space Floors/Walls: Carpet, wood/Sheetrock Ceiling: Sheetrock Lighting: Average Doors: Panel Restrooms: 4 bathrooms (3-full, 2-1/2) Range Oven, Dishwasher, Microwave, Refrigerator, Appliances: Disposal Site Improvements Garage: 2 stalls, attached Outdoor Storage: , playhouse (not included) Landscaping: Average UG Sprinkler System: None Fence: None Deck, hardwood floors, Princeton trim, kitchen window, Other: play house in back yard Depreciation Effective age: 11 years Est. Remaining Ecn. Life: 89 years Physical: Typical for age Functional: None, functional design. External: Slight, cost and value not presently equal. Comments: The subject building has a single family home design and layout. Addition in 2006 adding a new master bedroom, bath, and closet. A full basement was dug out as well under the new addition. Nagell Appraisal & Consul-544- 19 AERIAL PHOTOGRAPH Outline is approximate site area Nagell Appraisal & Consul-544- 20 SUBJECT PHOTOGRAPHS Front View Rear View Nagell Appraisal & Consul-544- 21 SUBJECT PHOTOGRAPHS Looking South on Huntington Way Looking West along Credit River Boulevard Nagell Appraisal & Consul-544- 22 SUBJECT PHOTOGRAPHS Family Room Master Bedroom (part of 2006 addition) Nagell Appraisal & Consul-544- 23 SUBJECT PHOTOGRAPHS Kitchen Bedroom Nagell Appraisal & Consul-544- 24 SUBJECT PHOTOGRAPHS Bathroom Utilities Nagell Appraisal & Consul-544- 25 HIGHEST AND BEST USE Highest and best use as defined in The Appraisal of Real Estate, Twelfth Edition, by the Appraisal Institute, 2001 is: "The reasonably probable and legal use of vacant land or an improved property, that is physically possible, legally permissible, appropriately supported, two ways, site as vacant and site as improved. Typically, there are four criteria in the Highest & Best Use analysis Legally permissible uses: What uses are allowed by the zoning? Physically possible uses: What uses are physically possible on the site: Financially feasible uses: Which possible & permissible uses will produce a positive return? Of the financially feasible uses, which use produces the highest Maximally productive use: return warranted by the market (the ideal improvements)? Site as Vacant Legally Permissible Uses: The current zoning allows for single-family residential development. Physically Possible Uses: The physical characteristics of the site appear suitable for development. Private well and septic are used for this area. The site has average access on a newer road. The site will allow for a number of residential uses. Financially Feasible Uses: Surrounding uses include residential. Market demand for residential uses is average. The subject has average views and access which is considered typical for a residential use. Maximally Productive Use: Most homes in the area are two-story and are on 2-10 acres sites. Homes sizes are typically between 2,000 and 4,500 SF above grade and are generally average to good quality. Conclusion Site as Vacant: G and surrounding uses, the highest and best use for the subject site as vacant would be for an average to good quality residential use. Nagell Appraisal & Consul-544- 26 Highest and Best Use continued Site as Improved Legally Permissible Uses: ed in the subject area. Physically Possible Uses: current single family use. Utilities are private, average access to site. Financially Feasible Uses: Surrounding uses include residential of good quality. Market demand for residential uses is soft due to the current economy. The subject has average views and access which is considered typical for a residential use. Maximally Productive Use: esidential use is logical. Conclusion Site as Improved: The existing subject quality and house size are within the market. Based on the above discussion the highest and best use of the subject as improved is the current residential use. Nagell Appraisal & Consul-544- 27 COST APPROACH The cost approach was considered but was not utilized. Due to the age of the improvements and the subjectivity to which depreciation is calculated for segregated individual costs, an estimated cost of improvements is not considered reliable. INCOME APPROACH The Income Approach is not considered appropriate in this situation; properties like the subject are not typically rented. Very limited rental data renders the Income Approach an unreliable indicator. Nagell Appraisal & Consul-544- 28 SALES COMPARISON APPROACH The Sales Comparison Approach to Value is predicated upon sales of properties with similar characteristics as the subject. The primary premise of this approach is that the market value of the subject is directly related to the prices of competing properties after adjustment. Adjustments are made in an effort to account for significant differences. Supply and Demand: Sales in the market result from negotiations between buyers, sellers and lenders. Buyers reflect market demand and sellers supply. If demand is high, prices tend to increase, if it is low, prices usually decrease. Demand for properties like the subject in recent years has been generally average. Consequently, prices have been stable. Substitution: The principle of substitution holds that the value of a property tends to be set by the price paid to acquire a substitute property of similar utility and desirability within a reasonable amount of time (The Appraisal of Real Estate, 13th Edition). The Sales Comparison Approach is less reliable if substitute properties are not available in the market. The subject market is generally average, consequently, there are ample sales to apply the sales comparison approach and formulate a reliable indication of market value. Balance: The market tends to force a balance between supply and demand. Balance can change due to shifts in population, variations in purchasing power, consumer tastes and preference and time. Externalities: When possible, select comparables with similar location, economic conditions and support facilities. The Following Outline Is Used In The Sales Comparison Approach: - A location map of the comparable sales. - Comparable sales are listed. - An adjustment grid using the comparable sales. - A discussion of adjustment and conclusion of value. Nagell Appraisal & Consul-544- 29 COMPARABLE LOCATION MAP Nagell Appraisal & Consul-544- 30 SALE COMPARABLE 1 Location: 19120 Eagleview Lane, Credit River Township Use: Single Family Home Legal or PID: 04-083008-0 Site Acres: 3 acres Year Built: 2002 Quality/Condition: VeryGood/Good Source: MLS Date of Sale: September, 2008 SF Above Ground: 3,666 SF Good, paved road with concrete curb, storm Street Condition Rating: sewer, virtually no cracks in street Property backs up to a golf course, house Comments: includes deck, pool, 6 car garage, and good quality upgrades Sale Price: $ 825,000 Nagell Appraisal & Consul-544- 31 SALE COMPARABLE 2 Location: 19766 Cedar Lane, Credit River Township Use: Single Family Home Legal or PID: 04-072042-0 Site Acres: 3 acres Year Built: 2005 Quality/Condition: VeryGood/Good Source: MLS Date of Sale: January, 2007 SF Above Ground: 3,171 SF Good, newer road, no curb and gutter, few Street Condition Rating: cracks Four season porch, within walking distance of golf course, deck, vaulted ceilings, and good Comments: quality upgrades. Traffic at back is distant and not considered adverse. Sale Price: $860,000 Nagell Appraisal & Consul-544- 32 SALE COMPARABLE 3 20602 Monterey Avenue, Credit River Location: Township Use: Single Family Home Legal or PID: 04-060007-0 Site Acres: 7 acres Year Built: 1996 Quality/Condition: Good/Good Source: MLS Date of Sale: September, 2007 SF Above Ground: 3,360 SF Average, no curb and gutter, uneven, Street Condition Rating: cracks Property includes: deck, security system, small Comments: barn in the backyard, and other good quality upgrades Sale Price: $695,000 Nagell Appraisal & Consul-544- 33 SALE COMPARABLE 4 Location: 8616 Oak Hill Circle, Credit River Township Use: Single Family Home Legal or PID: 04-023029-0 Site Acres: 2 acres Year Built: 1980 Quality/Condition: Average - Average Source: MLS Date of Sale: January, 2008 SF Above Ground: 4,980 SF Average, no curb and gutter, some cracks, Road Condition Rating: surface wear and tear Property includes: balcony, exercise room, built- Comments: ins, and other good quality upgrades Sale Price: $585,000 Nagell Appraisal & Consul-544- 34 SALE COMPARABLE 5 Location: 20795 Lynn Drive, Credit River Township Use: Single Family Home Legal or PID: 04-047013-0 Site Acres: 6 acres Year Built: 1993 Quality/Condition: Average/Average Source: MLS Date of Sale: July, 2008 SF Above Ground: 2,600 SF Fair, no curb and gutter, cracks and chips Road Condition Rating: in the surface Property includes: Three season porch, Comments: woodwork, pole barn, and other good quality upgrades Sale Price: $462,500 Nagell Appraisal & Consul-544- 35 SALE COMPARABLE 6 Location: 9376 Birch Lane, Credit River Use: Single Family Home Legal or PID: 04-033006-0 Site Acres: 5 acres Year Built: 1988 Quality/Condition: GoodAverage/Good Source: MLS Date of Sale: June, 2005 SF Above Ground: 2,476 SF Fair, cracks, chips, holes, no curb and Road Condition Rating: gutter Property includes: deck, woodwork, insulated Comments: garage, and other good quality upgrades. Also note that it backs up to a sizable pond. Sale Price: $487,000 Nagell Appraisal & Consul-544- 36 SALE COMPARABLE 7 Location: 5655 Starview Lane, Spring Lake Township Use: Single Family Residential Legal or PID: 110490100 Site Acres: 10.5 acres Year Built: 1992 Quality/Condition: Good/Good Source: MLS, CREV Date of Sale: April 2007 SF Above Ground: 3,010 SF Average, some cracks, no curb and gutter, Road Condition Rating: rock cover Property includes: walkout, large kitchen, fireplace, deck. Also note that property backs Comments: up to a lake (500 SF of lake frontage), however the lake is non-recreational and a nature lake. Sale Price: $680,000 Nagell Appraisal & Consul-544- 37 SALE COMPARABLE 8 Location: 5641 Meadow Lane, New Market Use: Single Family Residential Legal or PID: 030250010 Site Acres: 11.22 acres Year Built: 2000 Quality/Condition: Good/Good Source: MLS, CREV Date of Sale: October 2007 SF Above Ground: 2,238 SF Average to Good, no curb and gutter, slight Road Condition Rating: cracks Property includes: 4 fireplaces, pond, hardwood floors, sprinkler, patio, large barn, Comments: full deck along back of house, large patio beneath deck. Sale Price: $760,000 Nagell Appraisal & Consul-544- 38 SALE COMPARABLE 9 Location: 20980 Lynn Drive, Credit River Township Use: Single Family Residential Legal or PID: 040560020 Site Acres: 5 acres Year Built: 1998 Quality/Condition: Good/Good Source: MLS, CREV Date of Sale: September 2007 SF Above Ground: 2,812 Fair, cracks, chips, holes, no curb and Road Condition Rating: gutter Property includes: vaulted ceilings, quality Comments: finishes, 2 fireplaces. Sale Price: $775,000 Nagell Appraisal & Consul-544- 39 SALE COMPARABLE 10 Location: 19119 Southfork Drive, Credit River Use: Single Family Residential Legal or PID: 040540040 Site Acres: 5 acres Year Built: 1994 Quality/Condition: Good/Good Source: MLS, CREV Date of Sale: May 2008 SF Above Ground: 1,894 SF Road Condition Rating: Good, minimum cracks, no curb and gutter Property includes: 4 bedrooms, 4 baths, wet bar, fireplace, two tier deck, walk in pantry, pole barn with refrigerator and Comments: microwave as well as a ¾ bath, in ground sprinkler system, automated fertilizer system. Sale Price: $625,000 Nagell Appraisal & Consul-544- 40 Sales Comparison Approach -- continued Listed below is the adjustment grid for the comparables listed on the previous pages. Comparable items of significant difference are adjusted for. Sales Comparison Approach -- continued Nagell Appraisal & Consul-544- 41 Discussion of Adjustments All comparables are located in the subject market. Other sales reviewed were further; more dated and/or needed more adjustment. Sale or Financing/Concessions: The impact financing may have had on the sale price, favorable interest rate or term. All of the sales were cash or estimated to be near or at market rates. Comparables 2 and 4 adjusted for seller concessions. Time of sale: Overall, the market has been declining, adjustment is based on the chart on bottom of page 10 of the report. A rate of 1% per month is used. Comparable 6 is adjusted for positive market value in 2005/2006 and then for negative market value in 2007/2008. Location: The subject and comparables are rated similar. Comparable 8 is located farther out with gravel roads leading to the property, however, the property is located on a paved street. Site: Site size adjustment based on market reaction. Size adjustment based on contributory value of side yard area; $5,000 per acre. Site View: The subject and comparables are rated similar. Comparable 1 adjusted for backing to Legions Golf Course. Design Appeal: The subject and comparables are rated similar. Comparable 2 adjusted for power lines that are located along the eastern property line. Comparables 8 and 10 adjusted for being non-2 story homes, which tend to have higher costs. Quality & Condition: Comparables 1 (includes pool), 2, and 3 rated to be in better overall condition. Comparables 4, 5 (includes 3-season porch), 6, 7, 8, 9 (top of line finishes, vaulted ceilings), 10 are considered to have less detail, upgrades, etc. Age: Age adjustment is based on effective age. Adjustment based on $5,000 per year. Room Count: Market does not indicate a room count adjustment. All comparables are rated to have competing room counts. Gross Living Area: Adjustment of $100 per SF is appropriate for single-family homes. Comparable 4 adjusted at a lower rate of $50 per square due to large building area. Sales Comparison Approach -- continued Nagell Appraisal & Consul-544- 42 Basement SF: Basement area adjusted at $20 per SF. Finished basement area size adjusted at $25 per finished SF. Comparable 4 adjusted at a lower rate of $10 per square and $12.50 per square foot due to large building area. Functional Utility: All comparables have competing functional utility. Heating/Cooling: Comparables have similar heating and cooling. Garage: Garage adjustment is based on market reaction. Garages adjusted $5,000 per stall. Other: All other items are adjusted based on their contribution to value difference such as deck ($10,000), patio ($5,000), fireplace ($5,000), etc. Out Buildings: Subject has small shed on site. Comparables 1, 2, 4, 6, 7, and 9 adjusted for no out building. Comparables 5 (medium pole barn), 8 (two story head barn with respective out buildings. Driveway: Subject has a poor rated driveway. Comparable 6 had a gravel driveway and Comparable 1 had a concrete driveway. All other Comparables were considered to have good quality driveways. Street: Street adjustment is based on five categories: Rating is based on drive by inspection and township rating report. Adjustment amounts are based on sale pairings used in report and market acceptance. Condition Description Adjustment 1) Poor Significant cracking, crumbling, heaving + $5,000 potholes and surface ware. 2) Fair Cracking, crumbling, heaving potholes Subject and surface ware. 3) Average Minor cracking and surface ware. -$5,000 4) Good Essentially no or very minimal cracking. -$10,000 5) New Very good condition -$12,000 Sales Comparison Approach -- continued Nagell Appraisal & Consul-544- 43 Conclusion The comparables used are rated to be the most indicative of data analyzed and bracket the subject value. Other sales reviewed were older, further and/or needed more adjustment. The comparables utilized in this analysis each have several similar characteristics in common with the subject. While none are totally identical to the subject, each represents a viable alternative to a prospective buyer of the subject property and, after adjustment, can be utilized as an indicator of market value for the subject property. After adjustment the indicated range of value for the subject is from $405,175 to $459,850, with an average of $431,448. Taking into account market data, the quality and age of the subject a value near the mid range is considered appropriate. Therefore, the opinion of value for the subject is: OPINION OF VALUE SALES COMPARISON APPROACH: $431,000 Nagell Appraisal & Consul-544- 44 RECONCILIATION Cost Approachn/a Income Approachn/a Sales Comparison Approach$431,000 Cost Approach The is not considered appropriate in this situation. Income Approach The is not considered appropriate in this situation. Sales Comparison Approach The to value analyzed recent sales as compared with the characteristics of the subject property. The comparables reflect what a typical buyer would be willing to pay for the subject property. The comparables used are all competing properties located in the subject market and are considered to provide a reliable indicator of market value. Conclusion: The Sales Comparison Approach is deemed to be the only reliable indicator of value because it represents the actions of buyers and sellers in the area for competing properties. The derived market value for the subject property is: FINAL OPINION OF MARKET VALUE (Before): $431,000 Note: before the effective date of the appraisal. Changes in the overall economy, subject market, property use, lease rates, management and/or building subsequent to the effective appraisal date could impact market value. Nagell Appraisal & Consul-544- 45 AFTER ANALYSIS Nagell Appraisal & Consul-544- 46 PROJECT DESCRIPTION Credit River Township is making street improvements in to the subject road. The old road will Huntington Way be replaced with a new asphalt paved surface. The project is known as the Project. Existing Road Situation and Condition The existing road surface is nearing the end of its economic life with regard to condition and utility. Reportedly the stressed with significant transverse and alligator cracking, portions have heaving, chipping and potholes. Overall, the street is rated to be in poor condition, dated, and reflected likewise on the adjoining properties. Proposed Road Improvements The project includes removal of the old road. New road base (milled bituminous and class 5) with rock aggregate, fabric and asphalt surface will be installed with gravel shoulder. The road surface. All driveways will be cut back and tied into the new asphalt roadway. The road is to project. Discussion of Market Benefit Listed below are the factors that will be taken into consideration concerning the potential benefit to the subject property. Description Existing Road New Road 1) Road Surface Condition Fair Good/New 2) Curb None None 3) Storm Sewer Surface Surface 4) Road Proximity to properties Average No change 5) Visual Impact on Properties Dated New appearance Based on the grid above the subject properties will improve in 2 of the 5 categories. A typical buyer in the subject market commonly prefers a new surface road versus dated/older road improvements. In addition to visual benefit, a new road provides better and safer use for pedestrians (biking, walking, stroller use, roller skating, driving, etc.). Properties that directly abut the new street will benefit. Appraisal Development and Reporting Process In After Situation: The appraisal date in the after situation is the same as in the before condition. Consequently, the appraisal development and reporting process in the after situation are the same. The Regional Data, City & Neighborhood Description, Zoning & Flood Map in the after situation is the same in the before condition; see front portion of report. Nagell Appraisal & Consul-544- 47 SITE DESCRIPTION Dimensions: Rectangular, see plat map. Gross Site Area: 473,497 SF or 10.87 acres, per county Topography/Shape/Low: Sloping / Irregular / None noted Soil conditions/Drainage: Assumed to be Stable / Appears average Utilities: Electricity/Gas Average Water/Sanitary Sewer Well / Septic Off-Site Improvements: Street/Curb/Gutter: New Asphalt/None Sidewalk/Alley: None / None Street Lights: None Storm Sewer: Surface Access to site/Number: Huntington Way Frontage: Huntington Way and Credit River Boulevard View: Average Flood hazard zone: No, see following map Apparent Easements: Standard Utility & Drainage Encroachments: None apparent Unusual Conditions: None Apparent Use: Single Family Home Building Location: Eastern property line Surplus/Excess Land: None Functional Adequacy: Average North: Residential South: Residential Surrounding Uses: East: Residential West: Residential Distance to Major Road: About 2 miles to I-35 Comments: The subject is located in a residential small acreage area. The subject has good views of the county side and surrounding properties. No apparent unusual conditions, adverse easements or encroachments are noted. Most homes in the area are average to good quality. Nagell Appraisal & Consul-544- 48 DESCRIPTION OF IMPROVEMENTS Building Data Type of Building: Single Family Residential Number of Buildings/Stories One / Two Above Grade Finish: 2,244 SF Year Built: 1986 Quality/Condition: Average to Good / Average to Good Type of construction Structure: Wood Frame Roof Surface: Asphalt Shingle Exterior Walls: Lap Vinyl Doors/Windows: Average/Double Hung Casement Basement: Concrete Block Ceiling Height: Typical Mechanical/Plumbing/Insulation HVAC: Forced Air/CA Electrical/Plumbing: 200 amp / Copper Hot water heater: Average Elevator/Insulation: None / Assumed average Energy Management System: None Security System: None Computer Network System: None Wired Phone System: Yes Nagell Appraisal & Consul-544- 49 Description of Improvements continued Interior Space Floors/Walls: Carpet, wood/Sheetrock Ceiling: Sheetrock Lighting: Average Doors: Panel Restrooms: 2.5 bathrooms (2-full, 1-1/2) Range Oven, Dishwasher, Microwave, Refrigerator, Appliances: Disposal Site Improvements Garage: 2 stalls, attached Outdoor Storage: , playhouse (not included) Landscaping: Average UG Sprinkler System: None Fence: None Deck, hardwood floors, Princeton trim, kitchen window, Other: play house in back yard Depreciation Effective age: 11 years Est. Remaining Ecn. Life: 89 years Physical: Typical for age Functional: None, functional design. External: Slight, cost and value not presently equal. Comments: The subject building has a single family home design and layout. Addition in 2006 adding a new master bedroom, bath, and closet. A full basement was dug out as well under the new addition. Nagell Appraisal & Consul-544- 50 HIGHEST AND BEST USE Highest and best use as defined in The Appraisal of Real Estate, Twelfth Edition, by the Appraisal Institute, 2001 is: "The reasonably probable and legal use of vacant land or an improved property, that is physically possible, legally permissible, appropriately supported, two ways, site as vacant and site as improved. Typically, there are four criteria in the Highest & Best Use analysis Legally permissible uses: What uses are allowed by the zoning? Physically possible uses: What uses are physically possible on the site: Financially feasible uses: Which possible & permissible uses will produce a positive return? Of the financially feasible uses, which use produces the highest Maximally productive use: return warranted by the market (the ideal improvements)? Site as Vacant Legally Permissible Uses: The current zoning allows for single-family residential development. Physically Possible Uses: The physical characteristics of the site appear suitable for development. Private well and septic are used for this area. The site has average access on a newer road. The site will allow for a number of residential uses. Financially Feasible Uses: Surrounding uses include residential. Market demand for residential uses is average. The subject has average views and access which is considered typical for a residential use. Maximally Productive Use: Most homes in the area are two-story and are on 2-10 acres sites. Homes sizes are typically between 2,000 and 4,500 SF above grade and are generally average to good quality. Conclusion Site as Vacant: Given the and surrounding uses, the highest and best use for the subject site as vacant would be for an average to good quality residential use. Nagell Appraisal & Consul-544- 51 Highest and Best Use continued Site as Improved Legally Permissible Uses: Th Physically Possible Uses: current single family use. Utilities are private, average access to site. Financially Feasible Uses: Surrounding uses include residential of good quality. Market demand for residential uses is soft due to the current economy. The subject has average views and access which is considered typical for a residential use. Maximally Productive Use: G Conclusion Site as Improved: The existing subject quality and house size are within the market. Based on the above discussion the highest and best use of the subject as improved is the current residential use. Nagell Appraisal & Consul-544- 52 COST APPROACH The cost approach was considered but was not utilized. Due to the age of the improvements and the subjectivity to which depreciation is calculated for segregated individual costs, an estimated cost of improvements is not considered reliable. INCOME APPROACH The Income Approach is not considered appropriate in this situation; properties like the subject are not typically rented. Very limited rental data renders the Income Approach an unreliable indicator. Nagell Appraisal & Consul-544- 53 SALES COMPARISON APPROACH The Sales Comparison Approach to Value is predicated upon sales of properties with similar characteristics as the subject. The primary premise of this approach is that the market value of the subject is directly related to the prices of competing properties after adjustment. Adjustments are made in an effort to account for significant differences. Supply and Demand: Sales in the market result from negotiations between buyers, sellers and lenders. Buyers reflect market demand and sellers supply. If demand is high, prices tend to increase, if it is low, prices usually decrease. Demand for properties like the subject in recent years has been generally average. Consequently, prices have been stable. Substitution: The principle of substitution holds that the value of a property tends to be set by the price paid to acquire a substitute property of similar utility and desirability within a reasonable amount of time (The Appraisal of Real Estate, 13th Edition). The Sales Comparison Approach is less reliable if substitute properties are not available in the market. The subject market is generally average, consequently, there are ample sales to apply the sales comparison approach and formulate a reliable indication of market value. Balance: The market tends to force a balance between supply and demand. Balance can change due to shifts in population, variations in purchasing power, consumer tastes and preference and time. Externalities: When possible, select comparables with similar location, economic conditions and support facilities. The Following Outline Is Used In The Sales Comparison Approach: - A location map of the comparable sales. - Comparable sales are listed. - An adjustment grid using the comparable sales. - A discussion of adjustment and conclusion of value. Nagell Appraisal & Consul-544- 54 COMPARABLE LOCATION MAP Nagell Appraisal & Consul-544- 55 SALE COMPARABLE 11 Location: 19120 Eagleview Lane, Credit River Township Use: Single Family Home Legal or PID: 04-083008-0 Site Acres: 3 acres Year Built: 2002 Quality/Condition: VeryGood/Good Source: MLS Date of Sale: September, 2008 SF Above Ground: 3,666 SF Good, paved road with concrete curb, storm Street Condition Rating: sewer, virtually no cracks in street Property backs up to a golf course, house Comments: includes deck, pool, 6 car garage, and good quality upgrades Sale Price: $ 825,000 Nagell Appraisal & Consul-544- 56 SALE COMPARABLE 12 Location: 19766 Cedar Lane, Credit River Township Use: Single Family Home Legal or PID: 04-072042-0 Site Acres: 3 acres Year Built: 2005 Quality/Condition: VeryGood/Good Source: MLS Date of Sale: January, 2007 SF Above Ground: 3,171 SF Good, newer road, no curb and gutter, few Street Condition Rating: cracks Four season porch, within walking distance of Comments: golf course, deck, vaulted ceilings, and good quality upgrades Sale Price: $860,000 Nagell Appraisal & Consul-544- 57 SALE COMPARABLE 13 20602 Monterey Avenue, Credit River Location: Township Use: Single Family Home Legal or PID: 04-060007-0 Site Acres: 7 acres Year Built: 1996 Quality/Condition: Good/Good Source: MLS Date of Sale: September, 2007 SF Above Ground: 3,360 SF Average, no curb and gutter, uneven, Street Condition Rating: cracks Property includes: deck, security system, small Comments: barn in the backyard, and other good quality upgrades Sale Price: $695,000 Nagell Appraisal & Consul-544- 58 SALE COMPARABLE 14 Location: 8616 Oak Hill Circle, Credit River Township Use: Single Family Home Legal or PID: 04-023029-0 Site Acres: 2 acres Year Built: 1980 Quality/Condition: Average -/Average Source: MLS Date of Sale: January, 2008 SF Above Ground: 4,980 SF Average, no curb and gutter, some cracks, Road Condition Rating: surface wear and tear Property includes: balcony, exercise room, built- Comments: ins, and other good quality upgrades Sale Price: $585,000 Nagell Appraisal & Consul-544- 59 SALE COMPARABLE 15 Location: 20795 Lynn Drive, Credit River Township Use: Single Family Home Legal or PID: 04-047013-0 Site Acres: 6 acres Year Built: 1993 Quality/Condition: Average/Average Source: MLS Date of Sale: July, 2008 SF Above Ground: 2,600 SF Fair, no curb and gutter, cracks and chips Road Condition Rating: in the surface Property includes: Three season porch, Comments: woodwork, pole barn, and other good quality upgrades Sale Price: $462,500 Nagell Appraisal & Consul-544- 60 SALE COMPARABLE 16 Location: 9376 Birch Lane, Credit River Use: Single Family Home Legal or PID: 04-033006-0 Site Acres: 5 acres Year Built: 1988 Quality/Condition: GoodAverage/Good Source: MLS Date of Sale: June, 2005 SF Above Ground: 2,476 SF Fair, cracks, chips, holes, no curb and Road Condition Rating: gutter Property includes: deck, woodwork, insulated Comments: garage, and other good quality upgrades. Also note that it backs up to a sizable pond. Sale Price: $487,000 Nagell Appraisal & Consul-544- 61 SALE COMPARABLE 17 Location: 5655 Starview Lane, Spring Lake Township Use: Single Family Residential Legal or PID: 110490100 Site Acres: 10.5 acres Year Built: 1992 Quality/Condition: Good/Good Source: MLS, CREV Date of Sale: April 2007 SF Above Ground: 3,010 SF Average, some cracks, no curb and gutter, Road Condition Rating: rock cover Property includes: walkout, large kitchen, fireplace, deck. Also note that property backs Comments: up to a lake (500 SF of lake frontage), however the lake is non-recreational. Sale Price: $680,000 Nagell Appraisal & Consul-544- 62 SALE COMPARABLE 18 Location: 5641 Meadow Lane, New Market Use: Single Family Residential Legal or PID: 030250010 Site Acres: 11.22 acres Year Built: 2000 Quality/Condition: Average/Average Source: MLS, CREV Date of Sale: October 2007 SF Above Ground: 2,238 SF Average, some cracks, no curb and gutter, Road Condition Rating: rock cover Property includes: 4 fireplaces, pond, hardwood floors, sprinkler, patio, large barn full Comments: deck along back of house, large patio beneath deck. Sale Price: $760,000 Nagell Appraisal & Consul-544- 63 SALE COMPARABLE 19 Location: 20980 Lynn Drive, Credit River Township Use: Single Family Residential Legal or PID: 040560020 Site Acres: 5 acres Year Built: 1998 Quality/Condition: Good/Good Source: MLS, CREV Date of Sale: September 2007 SF Above Ground: 2,812 Fair, cracks, chips, holes, no curb and Road Condition Rating: gutter Property includes: vaulted ceilings, quality Comments: finishes, 2 fireplaces. Sale Price: $775,000 Nagell Appraisal & Consul-544- 64 SALE COMPARABLE 20 Location: 19119 Southfork Drive, Credit River Use: Single Family Residential Legal or PID: 040540040 Site Acres: 5 acres Year Built: 1994 Quality/Condition: Good/Good Source: MLS, CREV Date of Sale: May 2008 SF Above Ground: 1,894 SF Road Condition Rating: Good, minimum cracks, no curb and gutter Property includes: 4 bedrooms, 4 baths, wet Comments: in ground sprinkler system, automated fertilizer system. Sale Price: $625,000 Nagell Appraisal & Consul-544- 65 Sales Comparison Approach -- continued Listed below is the adjustment grid for the comparables listed on the previous pages. Comparable items of significant difference are adjusted for. Nagell Appraisal & Consul-544- 66 Sales Comparison Approach -- continued Discussion of Adjustments All comparables are located in the subject market. Other sales reviewed were further; more dated and/or needed more adjustment. Sale or Financing/Concessions: The impact financing may have had on the sale price, favorable interest rate or term. All of the sales were cash or estimated to be near or at market rates. Comparables 2 and 4 adjusted for seller concessions. Time of sale: Overall, the market has been declining, adjustment is based on the chart on bottom of page 10 of the report. A rate of 1% per month is used. Comparable 6 is adjusted for positive market value in 2005/2006 and then for negative market value in 2007/2008. Location: The subject and comparables are rated similar. Comparable 8 is located farther out with gravel roads leading to the property, however, the property is located on a paved street. Site: Site size adjustment based on market reaction. Size adjustment based on contributory value of side yard area; $5,000 per acre. Site View: The subject and comparables are rated similar. Comparable 1 adjusted for backing to Legions Golf Course. Design Appeal: The subject and comparables are rated similar. Comparable 2 adjusted for power lines that are located along the eastern property line. Comparables 8 and 10 adjusted for being non-2 story homes, which tend to have higher costs. Quality & Condition: Comparables 1 (includes pool), 2, and 3 rated to be in better overall condition. Comparables 4, 5 (includes 3-season porch), 6, 7, 8, 9 (top of line finishes, vaulted ceilings), 10 are considered to have less detail, upgrades, etc. Age: Age adjustment is based on effective age. Adjustment based on $5,000 per year. Room Count: Market does not indicate a room count adjustment. All comparables are rated to have competing room counts. Gross Living Area: Adjustment of $100 per SF is appropriate for single-family homes. Comparable 4 adjusted at a lower rate of $50 per square due to large building area. Nagell Appraisal & Consul-544- 67 Sales Comparison Approach -- continued Basement SF: Basement area adjusted at $20 per SF. Finished basement area size adjusted at $25 per finished SF. Comparable 4 adjusted at a lower rate of $10 per square and $12.50 per square foot due to large building area. Functional Utility: All comparables have competing functional utility. Heating/Cooling: Comparables have similar heating and cooling. Garage: Garage adjustment is based on market reaction. Garages adjusted $5,000 per stall. Other: All other items are adjusted based on their contribution to value difference such as deck ($10,000), patio ($5,000), fireplace ($5,000), etc. Out Buildings: Subject has small shed on site. Comparables 1, 2, 4, 6, 7, and 9 adjusted for no out building. Comparables 5 (medium pole barn), 8 (two story head barn with respective out buildings. Driveway: Subject has a poor rated driveway. Comparable 6 had a gravel driveway and Comparable 1 had a concrete driveway. All other Comparables were considered to have good quality driveways. Street: Street adjustment is based on five categories: Rating is based on drive by inspection and township rating report. Adjustment amounts are based on sale pairings used in report and market acceptance. Condition Description Adjustment 1) Poor Significant cracking, crumbling, heaving + $5,000 potholes and surface ware. 2) Fair Cracking, crumbling, heaving potholes Subject and surface ware. 3) Average Minor cracking and surface ware. -$5,000 4) Good Essentially no or very minimal cracking. -$10,000 5) New Very good condition -$12,000 Nagell Appraisal & Consul-544- 68 Sales Comparison Approach -- continued Conclusion The comparables used are rated to be the most indicative of data analyzed and bracket the subject value. Other sales reviewed were older, further and/or needed more adjustment. The comparables utilized in this analysis each have several similar characteristics in common with the subject. While none are totally identical to the subject, each represents a viable alternative to a prospective buyer of the subject property and, after adjustment, can be utilized as an indicator of market value for the subject property. After adjustment the indicated range of value for the subject is from $405,175 to $459,850, with an average of $431,448. Taking into account market data, the quality and age of the subject a value near the mid range is considered appropriate. Therefore, the opinion of value for the subject is: OPINION OF VALUE SALES COMPARISON APPROACH: $431,000 Nagell Appraisal & Consul-544- 69 RECONCILIATION Cost Approachn/a Income Approachn/a Sales Comparison Approach$443,000 Cost Approach The is not considered appropriate in this situation. Income Approach The is not considered appropriate in this situation. Sales Comparison Approach The to value analyzed recent sales as compared with the characteristics of the subject property. The comparables reflect what a typical buyer would be willing to pay for the subject property. The comparables used are all competing properties located in the subject market and are considered to provide a reliable indicator of market value. Conclusion: The Sales Comparison Approach is deemed to be the only reliable indicator of value because it represents the actions of buyers and sellers in the area for competing properties. The derived market value for the subject property is: FINAL OPINION OF MARKET VALUE (After): $443,000 Note: before the effective date of the appraisal. Changes in the overall economy, subject market, property use, lease rates, management and/or building subsequent to the effective appraisal date could impact market value. Nagell Appraisal & Consul-544- 70 SUMMARY OF BEFORE AND AFTER VALUE $431,000 Before Market Value After Market Value$443,000 Benefit$12,000 In this market, buyers have shown a preference for properties with road quality with regard to paving.Based on market data, the project described in this report provides benefit to the subject. Nagell Appraisal & Consul-544- 71 TYPE AND DEFINITION OF VALUE This report provides an opinion of market value. MARKET VALUE - The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: a) buyer and seller are typically motivated; b) both parties are well informed or well advised, and each acting in what they consider their own best interest; c) a reasonable time is allowed for exposure in the open market; d) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and e) the price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. th Source: The Dictionary of Real Estate Appraisal, 4 Addition. Appraisal Institute Special Assessment An assessment against real estate levied by a public authority to pay for public improvements, e.g., sidewalks, street improvements, sewers, etc. th Source: The Dictionary of Real Estate Appraisal, 4 Addition. Appraisal Institute ENVIRONMENTAL & BUILDING CONDITIONS Regarding any adverse environmental and/or improvement structural conditions (such as, but not limited to, hazardous wastes, toxic substances, mold, construction defects or inadequacies, etc.) present in the improvements, on the site, or in the immediate vicinity of None are apparent the subject property: , however, appraiser is not an expert in this field. Value assumes no hazardous or structural conditions exist. Value assumes any abandoned Nagell Appraisal & Consul-544- 72 CERTIFICATION I certify that, to the best of my knowledge and belief: 1) The statements of fact contained in this report are true and correct. 2) The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial and unbiased professional analysis, opinions, and conclusions. 3) I have no (or specified) present or prospective interest in the property that is the subject of this report, and no (or the specified) personal interest with respect to the parties involved. 4) I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 5) My engagement in this assignment was not contingent upon developing or reporting predetermined results. 6) My compensation for completing this assignment is not contingent upon the development or reporting of predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 7) My analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 8) For William R. Waytas, the reported analyses, opinions and conclusions were developed, and this Professional Ethics and Standards of Professional Appraisal Practice, which includes the Uniform Standards of Appraisal Practice. William R. Waytas has made a personal inspection of the property that is the subject of this 9) report. (If more than one person signs the report, this certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraisal property). 10) No one provided significant professional assistance to the person signing this report. (If there are exceptions, the name of each individual providing significant professional assistance must be stated.) 11) In accordance with the competency provision of the USPAP, we have verified that our knowledge, experience and education are sufficient to allow us to competently complete this appraisal. See attached qualifications. 12) As of the date of this report, William R. Waytas had completed the requirements of the continuing education program of the Appraisal Institute. 13) The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representative. William R. Waytas, SRA, CRP Certified General Nagell Appraisal & Consul-544- 73 EXTRAORDINARY ASSUMPTIONS OR HYPOTHETICAL CONDITIONS As stated by USPAP; Extraordinary Assumption: An assumption, directly related to a specific assignment, None Hypothetical Condition: That which is contrary to what exists but is supposed for the purpose of analysis. Appraised value assumes the road is installed on the same date as the effective date of the appraisal. ASSUMPTIONS AND LIMITING CONDITIONS 1. The appraisers assume no responsibility for matters of a legal nature affecting the property appraised or the title thereto, nor do the appraisers render any opinion as to the title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership and good management. 2. The furnished legal description is assumed to be correct. 3. Any sketch in the report may show approximate dimensions and is included to assist the reader in visualizing the property. The appraisers have made no survey of the property. It is assumed unless otherwise noted that no survey has been viewed and that all improvements are located within the legally described property. 4. The appraisers are not required to give testimony or appear in court because of having made the appraisal with reference to the property in question, unless arrangements have been previously made therefore. 5. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. Nagell Appraisal & Consul-544- 74 Assumptions and Limiting Conditions -- continued 6. The appraisers assume that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The appraisers assume no responsibility for such conditions, or for engineering, which might be required to discover such factors. 7. Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea-formaldehyde foam insulation, radon gas, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. 8. Information, estimates, and opinions furnished to the appraisers, and contained in the report, were obtained from sources considered reliable and believed to be true and correct. However, the appraisers can assume no responsibility for accuracy of such items furnished the appraisers. 9. Disclosure of the contents of the appraisal report is governed by the Bylaws and Regulations of the professional appraisal organizations with which the appraisers are affiliated. No part of the contents of this report, or copy thereof (including conclusions as to the property value, the identity of the appraiser, professional designations, reference to any professional appraisal organizations, or the firm with which the appraiser is connected), shall be disseminated to the public through advertising, public relations, news, sales, or any other public means of communications without the prior written consent and approval of the appraisers. 10. The appraisers have no present or contemplated future interest in the property appraised; and neither the employment to make the appraisal, nor the compensation for it, is contingent upon the appraised value of the property. The appraisers have no personal interest or bias with respect to the parties involved. 11. The appraiser has personally inspected the subject site. To the b knowledge and belief, all statements and information in this report are true and correct, and the appraisers have not knowingly withheld any significant information. 12. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and is our personal, unbiased professional analyses, opinions, and conclusions. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. Nagell Appraisal & Consul-544- 75 Assumptions and Limiting Conditions -- continued 13. The Americans with Disabilities Act ("ADA") became effective January 26, 1992. We have not made a specific compliance survey and analysis of the property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non-compliance with the requirements of ADA in estimating the value of the property. 14. No one provided significant professional assistance to the person(s) signing this report. 15. This appraisal assignment was not based on a requested minimum valuation or specific valuation or approval of a loan. 16. To the best of our knowledge and belief, the reported analysis, opinions, and conclusions were developed, and this report was prepared in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. Nagell Appraisal & Consul-544- 76 CURRICULUM VITAE Appraisal Experience William R. Waytas Presently and since 1985, has been employed as a full time real estate appraiser. Currently a partner and President of the Nagell Appraisal & Consulting, an independent appraisal firm (8 appraisers) who annually prepare 1,500 +/- appraisal reports of all types. Mr. Waytas was employed with Iver C. Johnson & Company, Ltd., Phoenix, AZ from 1985 to 1987. Properties appraised: Commercial - low and high-density multi-family, retail, office, industrial, restaurant, church, strip-mall, fast-food, convenience stores, auto-service and repair, hotel, hotel water park, bed & breakfast, cinema, marina, numerous special use properties, and subdivision analysis. Residential single-family residences, hobby farms, lakeshore, condominiums, townhouses, REO and land. Eminent Domain extensive partial and total acquisition appraisal services provided to numerous governmental agencies and private owners. Special Assessment numerous street improvement and utilities projects for both governmental and private owners. Review residential, commercial and land development. Clients - served include banks, savings and loan associations, trust companies, corporations, governmental bodies, relocation companies, attorneys, REO companies, accountants and private individuals. Area of Service - most appraisal experience is in the greater Twin Cities Metro Area (typically an hour from downtown metro). Numerous assignments throughout Minnesota. Professional Membership, Associations & Affiliations License: Certified General Real Property Appraiser, MN License #4000813. Appraisal Institute: SRA, Senior Residential Appraiser Designation, General Associate Member Employee Relocation Council: CRP Certified Relocation Professional Designation. International Right-Of-Way Association: Member HUD/FHA: On Lender Selection Roster and Review Appraiser DNR: Approved appraiser for Department of Natural Resources Testimony -- Court, deposition, commission, arbitration & administrative testimony given. Mediator -- Court appointed in Wright County. Nagell Appraisal & Consul-544- 77 Curriculum Vitae -- continued Committees -- President of Metro/Minnesota Chapter, 2002, Appraisal Institute. -- Chairman of Residential Admissions, Metro/MN Chapter, AI. -- Chairman Residential Candidate Guidance, Metro/Minnesota Chapter, AI. -- Elm Creek Watershed Commission, Medina representative 3 years. Education -- Graduate of Bemidji State University, Minnesota. B.S. degree in Bus. Ad. -- During college, summer employment in building trades (residential and commercial). -- Graduate of Cecil Lawter Real Estate School. Past Arizona Real Estate License. General & Professional Practice Courses & Seminars -- -- Course 101-Introduction to Appraising Real Property. -- Numerous Standards of Professional Practice Seminar. -- Fair Lending Seminar. -- Eminent Domain & Condemnation Appraising. -- Eminent Domain (An In-Depth Analysis) -- Property Tax Appeal -- Eminent Domain -- Business Practices and Ethics -- Scope of Work -- Construction Disturbances and Temporary Loss of Going Concern -- Uniform Standards for Federal Land Acquisitions (Yellow Book Seminar) -- Partial Interest Valuation Divided (conservation easements, historic preservation easements, life estates, subsurface rights, access easements, air rights, water rights, transferable development rights) Commercial/Industrial/Subdivision Courses & Seminars -- Capitalization Theory & Techniques -- Highest & Best Use Seminar -- General & Residential State Certification Review Seminar -- Subdivision Analysis Seminar. -- Narrative Report Writing Seminar (general) -- Advanced Income Capitalization Seminar -- Advanced Industrial Valuation -- Appraisal of Local Retail Properties -- Appraising Convenience Stores -- Analyzing Distressed Real Estate -- Evaluating Commercial Construction Residential Courses & Seminars -- Course 102-Applied Residential Appraising -- Narrative Report Writing Seminar (residential) -- HUD Training session local office for FHA appraisals -- Familiar with HUD Handbook 4150.1 REV-1 & other material from local FHA office. -- Appraiser/Underwriter FHA Training -- Residential Property Construction and Inspection -- Numerous other continuing education seminars for state licensing & AI Nagell Appraisal & Consul-544- 78 ADDENDA TO APPRAISAL REPORT Nagell Appraisal & Consul-544- 79