Comments…



SUGGESTED VERBAGE FOR COMMENTS

Well & Septic: Well and septic systems are common and typical in this market area. The well and septic systems that service the subject property are assumed to be adequate and functioning properly, tested for potability and approved by the local health department, located within the boundaries of the subject site and producing water pursuant to and in accordance with the State Engineer’s permit.

Septic System: Septic Systems are common and typical in this market area. The septic system that services the subject property is assumed to be adequate and functioning properly, approved by the local health department and located within the boundaries of the subject site.

Well System: A well system is common and typical in this market area. The well system that services the subject property is assumed to be adequate and functioning properly, approved by the local health department and located within the boundaries of the subject site.

Water Rights: The term “water rights” might best be described as the right to use a flow of water on or below or bordering a parcel of land. Water rights in Colorado are often transferred by separate deed. They do not run with the land. Water rights were not included in the analysis of current market value as these rights may be sold separately. The valuation of any water rights that may exist would require a separate analysis by someone qualified in at type of valuation.

Basement Floor Cracks: Some cracks were noted in the basement floor/concrete slab and have been considered and included in the overall condition rating of the subject property. The basement slab is not a structural component in this home and this is an “as is” appraisal.

GLA Rounding: Due to rounding, the "Square Feet of Gross Living Area" value contained in the  "Description of Improvements" section may not equal the values found in the "Sales Comparison Analysis" Grid and Sketch page.

 

FHA/Dept. of HUD Comments

Extraordinary Assumption and Limiting Conditions: As part of this assignment, the appraiser has completed the HUD/FHA Valuation Condition (VC) report form. The purpose of this is to assist Direct Endorsement Underwriters in determining if the subject property meets minimum property standards for HUD/FHA mortgage insurance. The VC checklist is based only on a visual inspection of the items listed. The findings are based on conditions readily observable at the time of the appraisal inspection. The appraiser is not a building contractor or qualified home inspector. The appraiser is not qualified to survey or analyze physical items that are not easily visible. If any parties to this transaction have concerns regarding structural, mechanical, infestation, contamination or other issues about the subject property, an expert in the appropriate field should be consulted.”

Purpose of the Appraisal: The appraisal is used to determine the value of the property for mortgage insurance purposes. The value serves as the basis for determining the maximum insurable mortgage loan. The appraisal is performed for the benefit of the Department of HUD, not for the public. Use by others is not intended.

New Home Construction: The subject property is a new home under construction. This appraisal has been made subject to its completion. Because the subject property is incomplete, the Homebuyer Summary (Form HUD-92564-HS) and the Valuation Conditions (Form HUD-92564-VC) have not been prepared.

Interest in the Property/Discrimination Clause: The appraiser has no interest in the property and has not performed the appraisal in any way on the basis of the race, color, religion, sex, handicap, familial status or national origin of either the occupants of the subject property or those properties in the vicinity of the subject.

Lack of a Conventional Comparable: Conventional sales do occur in this market area, however the three sales of homes most similar to the subject property sold with government insured or guaranteed loans.

Property Conforms: Property conforms to applicable minimum HUD/VA standards set forth in Handbook 4105.2

Cost Approach: Unimproved site value is estimated based on available sales & listings in the market area and/or allocation method. FHA does not require the cost approach for existing constructions over 1 year old. Result of cost approach on the subject property is not deemed to be reliable due to the difficulty of accurately estimating depreciation and the market values in this area mostly reflected by market place participants. Since it is considered, this is not a USPAP departure.

Miscellaneous

Drive-by Inspection: This is a drive-by appraisal provided at the specific request of the client. The interior has NOT been inspected. A complete exterior inspection has NOT been made. Total areas, room and bath count are based on county records and any available MLS information which is assumed to be reliable. Condition of the interior is assumed to be consistent with exterior condition as observed from the public street.

USPAP Comments

Intended Use: The intended use of this analysis and report is to assist the client with mortgage decisions. This report was prepared for the sole and exclusive use of the client and its use or reliance on by anyone other than the client is prohibited. The appraiser is not responsible for unauthorized use of the report. In plain English, if you are not the client listed above, you are a ‘third party’ to the report and are warned not to rely on this report in any way. It’s quite possible that your interpretation of the information contained in this report may be incorrect. No one, client or third party, should rely on this report to disclose the condition of the property or the presence/absence of any defects. This is an appraisal report, not a home inspection report. This report should be read in its entirety, including all attachments and addendum. Special attention should be given to the certification and limiting conditions.

Intended Users: The intended users include the client, and the secondary market. Use by others is not intended.

Scope of the Appraisal: The scope of the appraisal is to estimate the market value of the subject property by: (1) a physical inspection of the property; (2) an inspection of the subject neighborhood and analysis of regional characteristics; (3) identifying the appraisal problem; (4) investigation of pertinent data; (5) analysis and determination of Highest and Best Use of the subject property; (6) research of sold properties and current listings from the area; (7) analysis of the selected comparable sales and competitive listings; (8) consideration and application of the applicable approaches to value; (9) final reconciliation; (10) reporting the defining value.

Exposure Time: An estimate of reasonable exposure time for the subject property was based on the following when possible and appropriate: statistical information about days on the market of similar properties within the market area, information gathered through sales verification. Exposure time can best be described as that amount of time it would have taken to sell the subject property at the appraised value if the sale had occurred on the effective date of this report. It is different from marketing time which is the amount of time it might take to sell the property if it was put on the market on the effective date of this report. The subject is considered typical of the market and the estimate of market value was based on an exposure time of 0-90 days.

Non-Real Property: No personal property is included in the estimate of value.

Square Footage: Currently, no uniform standard exists for measuring residential properties in the real estate appraisal profession. In addition, the Colorado Real Estate Commission has determined that there are currently no uniform guidelines for determining responsibility for the accuracy of square footage of improved, residential real property transactions. The square footage totals noted in this appraisal report have been utilized as a tool for comparison. One should rely on their own, independent measurements if square footage is considered to be an important factor.

Lead Based Paint: The subject property was constructed prior to 1978 and is assumed to have lead based paint. For conventional financing remediation is not a requirement, however, the condition of the paint is considered in the overall condition rating of the subject property.

Seller Paid Points/Concessions: Comparable # _ sold with _ seller paid points and was adjusted accordingly. (One point equals 1% of the loan amount.) This is because sellers inflate listing prices in anticipation of incentives for perspective buyers.

Cost Approach for Condominiums: The Cost Approach is not applicable for individual condominium units due to the difficulties in estimating the value of land and difficulties in prorating an individual unit’s interest in the common elements.

Shared Access: A portion of the subject’s driveway appears to be shared with an adjacent property. No survey was provided for review. This appraisal assumes that there is legal and continual access to the subject property.

Income Approach Comments

In cases where there is no or significantly limited evidence of income producing properties (rentals) in the neighborhood or marketing area:

IF INCOME APPROACH IS USED:

1. Although the subject is not located in an income producing market, specific instructions from the client require the development of the Income Approach. Purchasers within this market would typically not use the Income Approach as an indication of value, or a basis for negotiation and acquisition. At least a portion of the data collected, analyzed, and used as the basis for the conclusion of market rent, gross rent multiplier, and value is extracted from similar markets outside of the specific subject property and should not be relied upon for acquisition or lending purposes.

IF INCOME APPROACH IS NOT USED:

2. Because of its demographic composition, this neighborhood/marketing area does not have a sufficient volume of rental properties for development of market rent or the gross rent multiplier. Although initially considered, the Income Approach is not found to be meaningful or appropriate in this assignment and is not developed. The resulting conclusion/s of value developed through the other approach(es) to value are felt to be more reflective of the market and elimination of the Income Approach is not detrimental to this assignment.

1st Bank

Manufactured Housing Approval Guidelines:

1stBank loans secured by manufactured housing and modular housing should comply with the following guidelines:

1. Property must be permanently affixed to a foundation on proper footings, below the frost line. Unit cannot be placed on leased land.

2. Appraisal must indicate very good condition.

3. Property must have the general appearance and functional utility of a site built home.

4. Property must have been constructed since June 15, 1976 and meet HUD code.

5. Home must have a minimum of 1000 square feet and two bedrooms.

6. The roof pitch should be not less than 3 feet for every 12 feet with a moderate overhang and an asphalt shingle roof.

7. The site must have a finished grade with positive drainage.

8. Singlewide or other mobile homes are not eligible.

Zoning Issues: Statements regarding zoning compliance are intended only in the most general sense. Zoning and building ordinances vary significantly from one municipality to another, and can be extremely detailed. The scope of this report does not include a comparison of every potentially significant characteristic of the subject property’s site and improvements relative to zoning and building ordinances.

Or According to a phone conversation on DATE with NAME OF LOCAL OFFICIAL, POSITION OF LOCAL OFFICIAL, the property legally complies with the local zoning ordinance.

Drainage Issues: Elevation of the dwelling above road grade promotes surface drainage, which appeared acceptable at the time of inspection. However, seasonal variations may occur, and subsurface drainage conditions are unknown.

Easements/Encroachments Comment: Unless otherwise noted, standard utility and right-of-way easements are insignificant to value. However, a current locational or boundary survey, which was unavailable to the appraiser, may reveal encroachments, easements, zoning violations or other matters of interest that could warrant modification of the appraised value.

EIFS (Synthetic Stucco): The subject’s exterior finish is EIFS, or synthetic stucco. EIFS is an acronym used by architects and others in the building trades that stands for Exterior Insulation and Finish System. A typical EIFS finish, or cladding, utilizes a foam board (usually expanded polystyrene) attached to a substrate (sheathing) such as plywood, oriented strand board (OSB), exterior grade gypsum board or cement-based composition board. The foam is then covered with a fiber mesh embedded in a thin base coat of a cement-like material. A finish coat of colored, textured, latex-based material is applied over the base coat. The result is a durable finish with good insulation properties. Properly applied, the finish coat is relatively maintenance free and waterproof. However, if water does penetrate the finish (usually through improperly caulked window and door openings), it cannot easily escape. The trapped water creates the potential for decay and rotting of both structural and non-structural framing members. If EIFS is applied per the manufacturer’s specifications and properly maintained thereafter, most installations will be moisture-free. Some EIFS installations are now designed with drainage mats (under the foam) that allow moisture to escape. It is unknown whether the subject has barrier or drainage EIFS cladding. The appraiser is not an expert in the field of evaluation problems associated with EIFS systems. It is recommended that the client employ qualified experts to inspect and address any area of concern. If negative conditions are discovered, the value estimate will likely require modification. Based upon my exterior observation - no visible signs of deterioration were seen. However, during the appraisal inspection, no adverse issues were seen.

Hardboard Siding: The subject is sided with a type of wood siding that may be one of several types of what is commonly referred to as ‘hardboard’ siding. Hardboard siding is different from siding cut form solid wood or manufactured from laminated wood (plywood). Hardboard siding is manufactured by using a resin to bond thin wood chips or wafers into planks. This results in a somewhat porous edge finish, which may have a potential for water absorption. Published reports and several class action lawsuits claim that some types of hardboard siding absorb water along the bottom edge, butt joints and nail holes. The claims state that as the water is absorbed the siding expands and the wafers separate, encouraging more water absorption and ultimately leading to decay. The appraiser is not an expert in the field of evaluating problems associated with hardboard siding. It is recommended that the client employ qualified experts to inspect and address any area of concern. If negative conditions are discovered, the value estimate will likely require modification. Based upon my exterior inspection - no visible signs of damage were seen.

Observation vs. Inspection: The routine inspection of the property and any improvements is for purposes of establishing the market value of the property. Attics and crawl space areas are typically not accessed. The property ”inspection” is really more of an “observation.” It is not to be regarded as a full property inspection of the type intended to reveal defects in mechanical systems, structural integrity, roofing, siding, or any other property component. The appraiser claims no special expertise in these area, nor is the appraiser an expert regarding issues related to foundation settlement, basement moisture problems, wood destroying (or other) insects, radon gas or lead based paint.

Unless otherwise noted, the appraiser assumes the various elements that constitute the subject property are fundamentally sound and in working order. Statements regarding condition, particularly those regarding heating and cooling systems, are based on superficial observations only. In short, the appraiser is not a home inspector and the appraisal report is not a home inspection report. The appraisal report should not be relied upon to disclose the condition of the property or the presence/absence of any defects. The client is invited and encouraged to employ qualified experts to inspect and address any area of concern. If negative conditions are discovered, the appraiser should be notified, as the value estimate will likely require modification.

Environmental Conditions: The appraiser has made no special effort to discover any adverse environmental conditions and accepts no responsibility for such discovery. No readily apparent adverse environmental conditions were observed during the normal course of the property inspection and it is assumed none exist. If any adverse environmental conditions are discovered, the appraiser should be notified, as the value estimate will likely require modification. The appraiser has no special expertise regarding environmental hazards and this report must not be considered as an environmental assessment of the property.

36 Month Sales History: There are no records of current listings or sales of the subject property within the past 36 months, per MLS and county records unless otherwise noted.

Market Conditions 01/05-06/05: In Colorado, the number of homes on the market in October 2004 fell 3.5% compared with October 2003. The U.S. Bureau of Census reported that the total number of housing permits issued through October 2004 rose 15.5% compared with the same period in 2003. State employment has posted year-over-year gains, the first such increases since July 2001. The October 2004 Colorado unemployment rate dropped to 5.0%, down 0.9 percentage points from the 5.9% rate posted in the state in October 2003.

Market Conditions 06/05-08/05: According to data from the Colorado Department of Labor and Employment, for all of 2004, employment is up 0.6% from 2003 levels. The unemployment rate averaged 5.1% in 2004 and is expected to drop to 5.0% in 2005. Residential building permits increased 15.3% in 2004, with gains in both the single-family and multi-family markets. Economic conditions in Colorado appear to be improving with gains being registered in employment, personal income, construction activity, and consumer spending.

Market Conditions 08/05-12/05: The U.S. Bureau of the Census reported single family home permits increased 3.4% while multi-family home permits decreased 19.1% through May 2005. Year-to-date May 2005, Colorado employment climbed 2.4%, the eighth fastest growth in the nation. Meanwhile, the unemployment rate remained unchanged at 5.3%. Home foreclosures in six of the seven metro counties rose 15.4% in second quarter 2005 compared with the same period last year.

Market Conditions 12/05-4/06: Employment, retail sales and personal income are all up in 2005. Employment through September increased 2.2 percent over the same period in 2004. Wages and salaries increased by 7.5% in the first half of 2005. Single-family permits are up 5.7% and multi-family permits are down 29.1% through September 2005.

Market Conditions 04/06-06/06: Through December 2005, Colorado employment rose 2.1% compared with 1.3% growth thru 12/04. Meanwhile, the December 2005 Colorado unemployment rate dropped to 4.6%. Single-family permits increased 3.3% compared with December 2004, while multi-family permits decreased 19.2%. Meanwhile, the number of homes on the market in December 2005 fell 4.2% compared with December 2004.

Market Conditions 06/06-10/06: Through March 2006, Colorado employment rose 2.3% compared with 2.1% growth thru March 2005. Meanwhile, the March 2006 Colorado unemployment rate dropped to 4.3%. Single-family permits decreased 7.9% compared with March 2005, while multi-family permits increased 69.9%. The number of homes on the market in March 2006 rose 9.1% compared with March 2005.

Market Conditions 10/06-01/07: The Colorado Economic Council reported single family home permits decreased 11.% while multi-family home permits increased 85.6%, year to date through June 2006. As a result of the relatively anemic job growth, Colorado's unemployment rate ticked higher in May and June to 4.5%. Personal income in Colorado continues to increase in 2006.

Market Conditions 01/07-04/07: The Colorado Economic Council reported single family home permits decreased 10.5%, while multi-family home permits increased 38.3%, through September 2006. Colorado's unemployment fell to 4.4% in September. Employment was up 1.9% in the Denver Metro/Boulder area and 2.5% in the rest of the state. The state’s economy is expected to continue growing at a moderate pace through 2007.

Market Conditions 04/07-9/07: The Colorado Economic Council reports the residential market in Metro Denver reported stronger home sales in the first 2 months of 2007 compared to the same period in 2006. Total home permits filed in Jan. 2007 were down 3.3% from Jan. 2006. The average single-family sales price is down 3.6% through Feb. 2007 and the average condo price is down 7.4%. Unemployment decreased to 4.1% in Feb. 2007.

Market Conditions 09/07-11/07: The Colorado Dept of Labor & Employment reports Denver’s job growth through July is up 1.8% over the same period last year. The unemployment rate averaged 3.9% through July, down from 4.6% in the same period last year. Total home sales dropped 3% between June and July, as did the number of existing homes under contract. On a year to date basis, Denver prices fell 1% below last year’s level.

Market Conditions 11/07-02/08: Metro Denver homes sales were down 0.5% from last year and inventory levels were down almost 4% through the first 9 months of 2007. New housing units were down 24% in September. Employment grew by 3000 jobs between August and September according to the CO Dept. of Labor & Employment. The unemployment rate for September was 3.8%.

Market Conditions 02/08-07/08: According to the NAR, existing home sales slipped 2% between November and December. Overall, residential construction activity remains depressed, but large swings in multi-family permits are creating volatility. According to Metro Denver EDC, the December year to date employment growth was up 1.7%. Metro Denver ended 2007 with an unemployment rate well below 2006.

Market Conditions 07/08-10/08: The number of closed home sales in Metro Denver rose for the fourth consecutive month in May. Foreclosure filings in Metro Denver declined 13% between April and May. May filings in each of the 7 Metro counties except Douglas County declined from April. Both the Denver and Boulder markets reported year to date employment gains of 1.7%.

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Market Conditions 10/08-01/09: All metro counties except Denver saw foreclosures rise through the second quarter of 2008 over the same period in 2007. Denver posted a 6% decrease through the second quarter 2008 over the prior year. The inventory of homes on the market was 25,673 in July, down 1.7% from the prior month. New home starts declined through the second quarter of 2008.

Market Conditions 01/09-04/09: Metro Denver’s job growth has slowed across most sectors with employers cutting 2,200 jobs between October and November. Unemployment rates increased for the 3rd consecutive month in November. Region wide, the unemployment rate reached 5.8%. The number of closed home sales in Metro Denver fell 31.8% between October and November. Residential construction activity continues to reflect a weak market for new homes.

Market Conditions 04/09-05/09: Metro Denver home sales fell 24% between December and January, although homes under contract rose slightly. The median quarterly home price fell 10.6% in 2008. January foreclosure filings declined 25.7% from the prior year, except in Denver and Adams County. Metro Denver unemployment rates increased in December reaching 6.1%, statewide unemployment reached 5.9% in December.

Market Conditions 05/09-06/09: Metro Denver home sales increased slightly 0.6% between January and February, while homes under contract rose 9.2%. Foreclosure filings fell more than 25% from the same months in 2008, in all seven Metro Denver counties. Metro Denver employers cut 6,000 jobs between January and February. Unemployment rates averaged 7.5% through the first 2 months of 2009.

Market Conditions 06/09-08/09: Metro Denver total existing home sales, including single family and condos for March were 3,206 up 29% over the prior month but down 13.6% from March of last year. New home starts declined through the 1st quarter of 2009. Foreclosure filings seem to be declining on a statewide basis. There were 10,745 filings, down 8% from the prior year. Through the 1st quarter 2009, job losses continue, with an unemployment rate of 8%.

Market Conditions 08/09-09/09: Metro Denver’s unemployment rate dropped to 7.3% in April, down from 8% in March. Total nonfarm employment declined 3.3% through April 2009. Permits for residential housing were down 55.5% year to date through April. Single family home permits decreased 51.3% in the Denver-Aurora area and 24.1% in Boulder. A demand for existing homes fueled a slight rise in prices of a tenth of a percent in March over February.

Market Conditions 09/09-02/10: Metro Denver's existing home sales increased more than 6% between June and July; 13.3% below sales from July 08. Residential building permits through June fell 68% from the permits filed in the first 6 months of last year. Foreclosure filings increased 5% between June and July. The unemployment rate was 7.8% in both June and July, roughly 2% lower than the nationwide rate.

Through July, employment decreased 1.5% in Larimer and 2% in Weld County. Unemployment rates for Larimer County are at 6.5% and 8.6% for Weld County. Residential housing permits decreased by 73.6 and 31.8% in Larimer and Weld counties.

Through July 09, employment in the Colorado Springs region declined 3.5% with the unemployment rate increasing to 8.3%. Single-family housing permits thru July were down 45.1% from last year's levels. There were a record 530 foreclosures in July.

Market Conditions 02/10-04/10: Metro Denver’s existing home sales rose 7.4% between October and November. Residential building permits issued in October fell 49% from the prior month. November foreclosure filings declined from the previous month in each of the 7 Metro Denver counties, except Boulder and Broomfield. The unemployment rate was 6.7% in both October and November.

Market Conditions 04/10-07/10: Metro Denver’s housing sector appears to be stabilizing, although remaining weak through 2010. Single-family homes and condo sales dropped 15% in 2009, prices increased steadily during the year. Total housing permits were down 52.8% in 2009. The unemployment rate rose to 7.8% in December.

Market Conditions 07/10-10/10: Metro Denver’s economy is showing signs of improvement. The unemployment rate declined from 7.6% in April to 7.5% in May. Employers added 12,800 jobs in May, more than typical for the month. Home sales increased 4.2% from April to May. Homes under contract dropped 41.3% from April to May, and residential building permits declined slightly.  Consumer spending continues to increase in 2010.

Market Conditions 10/10-2/11: Metro Denver’s unemployment rate declined slightly between July (8%) and August (7.9%). Total employment in August rose by 1,000 jobs. August home sales were 21% below last year’s sales and unsold inventory was 14.4% higher than the level one-year prior. Building permits thru August was 42.5% higher than the same months in 2009.

Market Conditions 2/11-5/11: Metro Denver’s unemployment rate in December remains at 8.5%. The job market saw small gains in November and December. Metrolist data shows rising home sales in November and December. Existing home sales thru 2010 fell 7.7% below 2009 totals. Building permits for all of 2010 were almost 53% higher than 2009. Foreclosure filings for the year were 12% below the total reported in 2009.

Market Conditions 5/11-8/11: Metro Denver’s unemployment rate in March was 9%. Employment across all industries in the first quarter was 0.8% higher than in the 1st quarter of 2010. First quarter average sales prices for single-family homes were up 1.1% over-the-year, condominium prices were down 3.1%. Building permits for all of 2010 were almost 53% higher than 2009. In the 1st quarter, 33.2% fewer foreclosures were reported than at the same time last year.

Market Conditions 8/11-12/11: Metro Denver’s unemployment rate in May was 8.3%, slightly higher than April. Total existing home sales in Metro Denver during May fell 14.5% below sales in May 2010. New foreclosure filings thru May were 33.5% lower than the same period 2010. Year-to-date building permits for detached and attached single family homes were down 9.2% and 26.4% from comparable 2010 totals.

Market Conditions 12/11-4/12:

Denver:

The metro Denver job market improved through the summer, with employment rising 0.6 percent year-to-date through July 2011 compared with the same period in 2010. Home prices remained essentially unchanged between February and June. Markets continue to adjust to a high number of foreclosures and uncertainty about the national and global economies. Residential construction remains at historically low levels, though activity continues to inch upward.

Northern:

Buoyed by strength in the agriculture and oil markets, the northern region's economy is the healthiest in the state. Employment in the region has continued to increase through the first half of 2011, and the region has seen stronger gains in consumer spending than the statewide average. Residential construction continues to be flat in the Greeley area. Meanwhile, residential construction in the Fort Collins- Loveland area remains at historically low levels, but the number of housing permits increased by 48.4 percent for the period of January to July 2011, compared with the same period in 2010.

Colorado Springs:

The Colorado Springs region is showing only weak signs of recovery. The region’s labor market remains one of the weakest in the state. Growth in consumer spending is outpacing the statewide average. There has been an increase in multifamily building permits, but single-family homebuilding remains at historical lows, and commercial construction activity continues to deteriorate. After showing signs of stabilizing, area employment dipped sharply in April.

Market Conditions 4/12-10/12:

The Denver metro area managed to reverse 19 months of year-over-year declines in the S&P/Case-Shiller Index in January 2012. Improving by 0.2% from January 2011. The metro Denver job market has continued to improve with unemployment dropping to 7.9%. Home loan interest rates remain low with adequate supply of available homes to purchase.

Market Conditions 10/12-1/13:

According to the S&P/Case-Shiller Index for July 2012, home prices in the Denver metro area showed an average increase of 5.4% over the past 12 months. The metro Denver unemployment rate decreased to 8.2 percent in August 2012, ending slightly higher than the national average. Home loan interest rates remain low with adequate supply of available homes to purchase.

Market Conditions 1/13-:

Denver Metrolist reports indicate the average sales price in November 2012 stood at $285,664, up 3 percent from October and up 13 percent year over year. Average days on the market continued to drop from 2011 levels: 70 days as opposed to the 100-day average in November 2011. That average climbed by four days from October’s 66-day average.

Vacancy Rates 07/05- (Source: Office of State Planning and Budgeting Newsletter, Spring 2005): According to the Apartment Association of Metro Denver, the Denver-area rental market is improving. In first quarter 2005, the vacancy rate declined to 9.3% compared with 10.0% in fourth quarter 2004. Additionally, first quarter average rent increased to $833.51 compared with $821.68 in fourth quarter 2004.

The first quarter average rent was the metro-area’s highest since averaging $827 in third quarter 2001. The improving rental market is attributed to job growth and increased concessions and marketing efforts.

Digital Signatures: The signature(s) affixed to this report, and certification, were applied by the reviewer and/or supervisory reviewer and represent their acknowledgements of the facts, opinions and conclusions found in the report. Each reviewer applied his or her signature electronically using a password encrypted method. Hence these signatures have more safeguards and carry the same validity as the individuals hand applied signature. If the report has a hand-applied signature, this comment does not apply.

Entrepreneurial Profit Comment: A market-derived figure that represents the amount an entrepreneur expects to receive for his/her contribution to a project (risk) equals the difference between the total cost of a property and its market value. Typically, entrepreneurial profit is in the 10% to 20% range depending on market conditions, value range of property being analyzed, and specific property type. Entrepreneurial profit for this assignment is estimated at ___% or $________, which equates to $__.__ per square foot. The entrepreneurial profit is added to the base cost new in the Cost Approach section of this report.

Type of Value: Market Value

Definition of Value: Attached

Source of Value Definition: Office of the Comptroller of Currency under 12 CFR, Part 34, Subpart C-Appraisals, 34.42 Definitions (f).

NHM’s SRA Comments on Certification Page:

The reported analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.

The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

As of the date of this report, Nathan Medvidofsky has completed the continuing education program of the Appraisal Institute.

Carbon Monoxide Detectors: Colorado House Bill 09-1091 went into effect on July 1, 2009. It requires that homes with a fuel-fired heater or appliance, a fireplace, or an attached garage and included one or more rooms lawfully used for sleeping purposes (bedroom), that there be an operational carbon monoxide alarm installed within fifteen feet of the entrance to each bedroom or in a location as required by the applicable building code. The law affects the sellers of existing single-family homes as well as homes where "interior alterations, repairs, fuel-fired appliance replacements, or additions, any of which require a building permit occurs to also have a detector. Additionally, it affects multi-family dwellings similarly but also gets applied whenever there is a vacancy. The bill also allows "a municipality, city, home rule city, city and county, county, or other local governmental entity" to adopt more stringent requirements. As appraisers, it is beyond the scope of this report to determine if there is a detector, if it is operational, if it is properly installed, and if it is properly located. If this is important to the users and/or readers of this report, they are advised to retain an expert in the area.

Comment to use when discounting a residential property with estimated marketing time exceeding 12 months: Due to the relatively high risk associated with holding real estate in this current economic environment, we have used an annual discount factor of 15%. This is also a number that we have frequently found and used in cost approaches as entrepreneurial profit for the developer that is taking the risk of building the home and holding it until it sells.

[modify the next part to suit the situation]

Since we estimate that this home will take 3 months or 1/4 of a year to sell in excess of 12 months, we have used a discount of 3.75% (15%/4 quarters) to the anticipated sales price (future value), to derive our 12-month marketing time value.

UAD Comments:

"The intended user of this appraisal report is the lender/client. No additional intended users are identified by the appraiser. This report contains sufficient information to enable the lender/client to understand the report. Any other party receiving a copy of this report for any reason is not an intended user; nor does receiving a copy of this report result in an appraiser-client relationship. Use of this report by any other party(ies) is not intended by the appraiser. "

"The Intended Use is to evaluate the property that is the subject of this appraisal for a mortgage finance transaction, subject to the stated scope of work, purpose, reporting requirements, and the definition of market value."

"At the request of the client, this appraisal report has been prepared in compliance with the Uniform Appraisal Dataset (UAD) from Fannie Mae and Freddie Mac. The UAD requires the appraiser to use standardized responses that include specific formats, definitions, abbreviations and acronyms. The appraiser attempted to obtain an adequate amount of information in the normal course of business regarding the subject and comparable properties. Some of the standardized responses required by the UAD, especially those in which the appraiser has not had the opportunity to verify personally or measure, could mistakenly imply greater precision and reliability in the data than is factually correct or typical in the normal course of business. Examples include condition and quality ratings as well as comparable sales and listing data. Not every element of the subject property was viewable and comparable property data was generally obtained from third-party sources. Consequently, this information should be considered an 'estimate' unless otherwise noted."

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