David Michonski

Coldwell Banker Previews International

David Michonski476 S. Frontage Road, Vail, CO

Type Description Year Value

Purchase 1995 $ 195,000

Improvements 2005 $ 225,000

Improvements 2006 $ 15,000

Improvements 2008 $ 35,000

Sales 2010 $ 950,000

Rate of Return: 7.39 %

While the Home Appreciator gives an accurate indication of the annual rate a home has

appreciated or depreciated accounting for major improvements, it does not provide a

precise definition. For instance, it asks just to input the year of purchase, improvements

and sale rather than an exact date for each. Given the time value of money, not doing so

will alter the calculation slightly. To create a more precise rate of return one would have to

enter the exact day, month and cost of purchase, improvements and sale. Additionally,

the Home Appreciator does not take into account capital gains taxes, the cost of upkeep,

taxes, assessments, maintenance and other variables that would change the calculation.

Finally, it does not take into account leverage. If for instance, it calculates that a home

has appreciated 3% a year, but was leveraged with an 80% mortgage and 20% equity,

then the return on the equity invested would be approximately 15% a year, not 3%. In

such an instance, the Home Appreciator errs on the side of under-estimating the return

and hence the value of a home investment. Nonetheless, having calculated the rate here,

a homeowner can then adjust such rate for their individual leverage and structure. The

Home Appreciator should not be used for such precise calculations and the provider of

the above rates of appreciation and Power Marketing.pro, Inc specifically disclaim any

liability for the Home Appreciators imprecision. Power Marketing.pro, Inc is not responsible

for errors of information inputted by the user that results in inaccurate returns. Anyone

desirous of more precise and accurate calculations should consults a financial advisor,

accountant or financial analyst skilled at calculating internal rates of return on investments.