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y G L t ADDENDUM Borrower. Earl Hemmerich File No.: Pequot5053Hemm Property Address: )00(County Road 112 Case No.: City: Pequot Lakes State: MN Zip: 56472 Lender. Earl Hemmerich Purpose and Function of Appraisal The purpose of this appraisal is to estimate the market value of the subject property as defined herein as of the date of the inspection of this appraisal. The function of this appraisal is to assist the lender in evaluating the subject property for lending purposes, if this is a federally related transaction. The property rights appraised are fee simple estate. Fee simple estate is defined as other interest or estate subject only to the limitations imposed by governmental powers of taxation, eminent domain, police power, and escheat. Extent of Appraisal Process This appraisal is based on the information gathered by the appraiser from public records, other identified sources, inspection of the subject property and neighborhood,and selection of comparable sales within the subject market area. The original source of the comparables is shown in the data source section of the market grid along with the source of confirmation, if available. The original source is presented first. The sources and data are considered reliable. When conflicting information was provided,the source deemed most reliable has been used. Data believed to be unreliable was not included in the report nor used as a basis for the value conclusion. Legal Description ALL OF NE1/4 OF SE1/4 E OF RAILROAD RIGHT-OF-WAY,EXCEPT S 10 FT;EXCEPT N 250 FTOF E 594 FT&EXCEPT W 250 FT OF E 826 FT OFS 165 FT,EXCEPT RESERV&EASEMT OF RECORD.EX.PART TO MERL HURRY. SEC 10,TWP 136,RG 29 Site Comments The site is a 11.9 acre parcel located within the Pequot Lakes city limits. City sewer and water are currently located on the contiguous parcel to the south of the subject property and is available for future • connection. The site is zoned for Multi-Family use. There were no obvious adverse easements,encroachments,or conditions,observed by this appraiser, that would have a negative impact on the subject's value. Comments on Sales Comparison Note: All comparables used in this appraisal report are closed land sales,according to records reviewed by this appraiser. A search for comparable sales was made in the subject's market area. It should be noted that the overall market in this,area is limited. Consequently,the quality and number of comparables are limited as well. It is this appraiser's judgement that the comparables displayed are the most comparable and the best indicators of value to the subject property that could be found at this time. The direct sales comparison approach requires adjusting and analyzing comparables to derive a value estimate for the subject.The various sale prices are adjusted after identifying relevant adjustment factors and after quantifying the effect of a difference between the comparable and the subject. Before any adjustment can be identified or quantified,a sale must be considered sufficiently comparable to the subject property. Even if the sale is considered sufficiently comparable, a determination must be made as to the adequacy of the data collected. The difficulty in quantifying adjustments is a result of real estate being unique in nature,with no two ..properties being identical. Additionally,not all differences require an adjustment. This is true if the market does not pay a premium or lower the price for a difference between similar properties. The Appraiser typically will have to rely on reason and experience to decide which differences should be adjusted,as well as the magnitude of any adjustments. Site adjustments are normally one of the larger adjustments. This is because of the significant differences in quality, size, and location of the various available sold comparables. Since there are typically few sold comparable sites available in a given area,we analyze and compare land-to-building ratios and county records,as well as any other available market data,in determining adjustments. Adjustments of under$1000 were not made as they are not realized in this market and,therefore,are considered insignificant. Addendum Page 1 of 4