Real Construction Cost http://realconstructioncost.com Real Construction Cost appraisal to insure for rebilding. Mon, 25 Aug 2008 03:28:01 +0000 http://wordpress.org/?v=2.3.2 en Real Construction Cost Increases Cause Underinsurance Danger for Commercial Property Owners http://realconstructioncost.com/14/real-construction-cost-increases-cause-underinsurance-danger-for/ http://realconstructioncost.com/14/real-construction-cost-increases-cause-underinsurance-danger-for/#comments Mon, 25 Aug 2008 03:15:36 +0000 admin http://realconstructioncost.com/14/real-construction-cost-increases-cause-underinsurance-danger-for/ Remember inflation? Big increases in the real cost of construction and commercial property repair over the past year are making underinsurance a growing problem for business owners. It is more of a problem during times of inflation because the value of the items insured rises over the course of the policy term. Generally that’s what insurers will pay, even if the value has gone up and in end the insurance payment won’t cover the loss.
The cost of building commercial and industrial buildings in the US has increased 11 percent in the past 12 months, according to industry sources.
The cause in these unprecedented increases is the prices of steel, concrete, petroleum products and shipping. People automatically think fuel when they read petroleum, but what they forget is that there is a multitude of products that are made from oil. Adding more pressure to the cost of construction materials is China consuming more and more commodities, allowing increased demand for commodities, to work on the marketplace inflation.
So if you are a property insurance buyer and used a year-old statement of values for their August 1st renewals, you could be underinsured by as much as 11 to 18 percent.

Inflation is only one level of the underinsurance problem. In this hard market, property insurance underwriters have been strict in penalizing insurance owners whose insurable values are understated. A most common penalty is to restrict payment on a claim to the amount reported on the statement of values. Another way they penalize insurance buyers is by a coinsurance clause that is included in most policies. When a claim exceeds the insurable values, loss payments are calculated by the following formula: the amount on the company’s statement of values is divided by the actual value at the time of the loss. The ratio is then applied to the loss amount, and the insurer pays the resulting amount. The balance of the loss is the responsibility of the coinsurer: i.e., the insurance buyer.
What can be done about it? We recommend several strategies.
§ First, exercise extra caution in the preparation of your statement of
values. (current appraisal)
§ Consider getting updated appraisals, with your largest facility and then working your Way through the list.
§ Consider getting business interruption values prepared and certified by a CPA, from an accredited Appraiser who specializes in appraisals for business interruption claims for insurance buyers. (Business interruption values are one of the components of a list of insured values; the other is physical property values.)
§ Make sure your loss prevention appraisals are accurate and up to date.
§ Remember the first rule of underwriting: if there is a gap between the information your Underwriter needs and what you provide, the underwriter will fill the gap with pictures of dead presidents – and you will be expected to provide those pictures.
With real construction costs rising, it is more crucial than ever to have an accurate –  property insurance values. The underwriters look at the amount of information you supply them with, as how well informed you are, to establish your cost of insurance.

We can provide all of these services to you with the utmost of experience and professionalism.
Contact us for your business solutions. Whether it be forensic appraisals, or as simple as equipment or personal property, or as complicated as a business valuation with FASB 143 appraisal. We know what we are doing where as other think they do but cost you more.
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]]> http://realconstructioncost.com/14/real-construction-cost-increases-cause-underinsurance-danger-for/feed/ Hundreds are discovering what the Real Construction Cost is after its to late! http://realconstructioncost.com/13/hundreds-are-disscovering-what-the-real-construction-cost-is-after-its-to-late/ http://realconstructioncost.com/13/hundreds-are-disscovering-what-the-real-construction-cost-is-after-its-to-late/#comments Mon, 28 Apr 2008 03:56:10 +0000 admin http://realconstructioncost.com/13/hundreds-are-disscovering-what-the-real-construction-cost-is-after-its-to-late/ Once again the insurance companies win by not insuring for the real construction cost. This can happen anywhere in America and will continue to happen until people understand what the real construction cost of their property is.

Six months after wildfires burned 300,000 acres and destroyed 1,350 homes in San Diego County, victims face new difficulties with real construction cost in rebuilding.

As burned-out homeowners hire architects and contractors, some are finding that their insurance settlements aren’t going to cover all the real construction costs of rebuilding.

Teresa Manley, with the San Diego Firestorm Community Recovery Team. “It’s a full-time job to rebuild. It’s not like people go to bed saying, ‘I’m going to build a house tomorrow.’ Most people won’t be able to rebuild in a year and a half.”

George Kehrer an attorney and retired contractor working with Community Assisting Recovery, a group for homeowners. He said insurance payouts are far short of the construction cost needed to rebuild in most cases. The real construction cost discrepancies range from $60,000 up to $1.4 million, he said.

“Less than 10 percent of the people are happy, and the rest are just finding out that they are underinsured,” Kehrer said. “After six months, they’re in denial that someone has concealed the facts that they’re underinsured on the real construction cost.”

Kehrer has been speaking with people. He said of the 400 cases he’s seen to date, four had payouts within $3,000 of the real construction cost and 20 people had coverage that was close when combined with other insurance payouts. The rest, or 95 percent, he said, are underinsured.

“People are coming out of the woodwork and realizing that there is a problem,” Kehrer said.

Kehrer did the same in the 2003 fires, when he handled 1,020 cases. He said in that disaster the underinsurance averaged $206,000 based on the 120 cases that were disclosed.

This time, Kehrer’s data indicates that the gap between the settlement and real construction cost of rebuilding is more than $300,000.

Kehrer said the minimum construction cost is about $190 per square foot and can go as high as $450 per square foot.

“That’s just to get the house,” he said. “That doesn’t include the interior and furniture.”

“A lot of people are convinced that there’s nothing more that they can do,” Kehrer said. “They build smaller or buy a replacement elsewhere.

The insurance companies don’t care how much you are covered for. They just want the premiums every month. They also want you to give up and go away. They don’t care that you don’t know what the real construction cost is when you sign a new insurance policy. All of those people and the people in the past disasters know what real is, and they will defiantly be asking the right questions before they sign again.

So call or email us here at Official Asset Appraisers, let us help you with the real construction cost before there is a disaster.

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]]> http://realconstructioncost.com/13/hundreds-are-disscovering-what-the-real-construction-cost-is-after-its-to-late/feed/ Real Construction Costs to surge again http://realconstructioncost.com/12/real-construction-costs-to-surge-again/ http://realconstructioncost.com/12/real-construction-costs-to-surge-again/#comments Sat, 12 Apr 2008 23:14:14 +0000 admin http://realconstructioncost.com/12/real-construction-costs-to-surge-again/ The real construction cost activity since 2001 has brought with it the strongest rise in real construction costs since the late 1980s. In real terms, to the general rate of inflation in the economy, this period has actually been higher than the cost increases of the 1980s.

It is not surprising that real construction costs are at a very high level at a time when construction activity in Australia and other parts of the world is also running at record highs and still rising.

We expect real construction costs all over the world to surge once again over the next 12 months, as construction cost continues to climb to new record highs. Total construction costs increased by 4.2 per cent over the year to June 2007. Macro monitor is forecasting the rate of increase to accelerate to over 6 per cent in 2008. Non-residential construction costs are expected to increase by more than 7 per cent in 2008.

Looking at individual cost categories; labor costs are going to be the strongest contributors of cost increases over the next two years. Previously, materials prices were increasing more, driven in particular by increasing world metals prices. Steel, aluminum and copper are all important to construction and all experienced big price increases on world markets over the 2004 to 2007 period.

Over the past four years to June 2007, real construction costs increased by 6.5 per cent per year. In the year to June 2008, materials costs are forecast to increase by 4.4 per cent. Wages costs increased by 4.7 per cent on average over the four years to June 2007, but are now expected to increase by 7.5 per cent in the year to June 2008. Falling productivity, the increase in labor costs will be close to 12 per cent, on our forecasts.

Looking longer term, the cost in the construction sector is expected to ease considerably once the level of activity stabilizes. Our forecasts this will happen during the 2009/10 to 2011/12 period. Once the demand for labor and all of the other inputs start to fall, the relentless upward pressure on costs will be alleviated. Overall forecast to be declining in real terms by 2010/11.

What does all this mean to you the business owner that owns his own building? It should stand out to you of a prime example of the fluxuation of construction cost over even a short period of time. You need to have your building appraised on a regular basis so that you are not either paying to much or not enough insurance for your building on replacement, rebuilding or the real construction cost of your building. Official Asset appraisers can help you value your assets, contact us now.

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]]> http://realconstructioncost.com/12/real-construction-costs-to-surge-again/feed/ Scope of Appraisals http://realconstructioncost.com/11/11/ http://realconstructioncost.com/11/11/#comments Fri, 04 Apr 2008 00:31:17 +0000 admin http://realconstructioncost.com/11/11/ All Appraisals performed by Official asset Appraisers are thoroughly Researched, Documented, and Reported for the purpose of value under the type of value concept for the client.  This process, from start to finish, remains the Responsibility of each Appraiser, which is in line with our own internal policy of maintaining Individualized Education, Current Market Economic Awareness, and Professional Skills.It is Official asset Appraisers goal to stay ahead of providing our clients with the absolute best in service.  Therefore, we are continually in pursuant to our clients changing needs and requirements; as such, the following aspects have been incorporated into our inventory appraisal format.

·  An expanded Exit Strategy that provides more analysis of liquidation options, which is based on a comparative foundation to actual liquidations.

·  A thorough listing of Lender Requirements to the subject, which includes details of provided reports, reports required, and any reporting restrictions.·  Full disclosure of any Off-site, Consigned, or other Extraordinary Inventories for which more precise.

·  A discussion of Potential Negative Factors that may loose value over time if not properly monitored.


In addition to the above, the following represents a list of the various types and formats of appraisal reports available according to the Uniform Standards of Professional Appraisal Practice.

Report Types:

Complete Appraisal:  An estimate of value performed without invoking the Departure Provisions of USPAP - Represents an assignment whereby the appraiser estimates the value of the subject without any atypical assumptions or conditions and “certifies” without reservations.A Appraisal in Summary Format is representing an unbiased third-party opinion of value, which can be fully supported by data and documentation in the project file.

Limited Appraisal:
Limited appraisals do not withstand scrutiny sometimes under examination.  The definition implies “something less than a complete appraisal” and, has not been documented thoroughly.

Report Formats:

Summary Format:  This format covers all aspects relative to a Complete Scope Appraisal. The presentation of information is more concise. Most appraisals are provided in this format.Restricted Format:  This format is a minimum presentation of information.  Its use is restricted to the client or clients agents and only for the purpose for which it is requested.
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]]> http://realconstructioncost.com/11/11/feed/ Don’t let anybody guess when it comes to your Equipment and Machinery Appraisal http://realconstructioncost.com/10/10/ http://realconstructioncost.com/10/10/#comments Wed, 26 Mar 2008 04:03:36 +0000 admin http://realconstructioncost.com/10/10/ Can you rely on a guess, book value, a non-certified person, when it comes to equipment and machinery appraisals, or auctioneer all of whom may have a “hidden agenda”?  The answer is NO”.  Why not?  Relying on a guess, book value, auctioneer, or even a CPA is not accurate. We use methodology of appraisal and are experts in determining machinery and equipment values for every type of equipment and machinery.  You can have confidence in a Certified Appraisal Report prepared by the Official Asset Appraisers (USPAP accredited) because it is accurate, substantiated, defensible, and irrefutable.  Our Appraisal will hold up to the scrutiny of court. (Appraisal Witness) Will Yours?There are 20 typical reasons a business owner, CPA, attorney, lenders, leasing agents, Business Brokers, and others absolutely require the expertise of an independent third party Certified Machinery and Equipment Appraisal prepared by Official Asset Appraisers.

  • Business Valuation
  • Financing / Loans / Leases
  • Buy / Sell Agreements
  • Tax Purposes
  • Converting From C To S Corp
  • Insurable Value
  • Cost Segregation
  • Estate Planning
  • Trust Agreements
  • Valuing Goodwill
  • Divorce Settlements
  • Partnership Dissolution
  • Litigation Support 
  • Gift Planning
  • 1031 Exchanges
  • Sarbanes-Oxley
  • GASB 34
  • Bankruptcy
  • Retirement Planning
  • Strategic Business Planning

All of these are valid reasons to have your equipment and machinery appraised. Even though the most common reasons are listed above for equipment and machinery appraisals, you should never use any of the most common professionals listed above. Even though you may trust them, they are not the one to appraise your equipment or machinery. Locate a accredited (USPAP) appraiser for your equipment and machinery appraisal before disclosing any confidential or sensitive information. Ask other types of appraisers for references if necessary. Verify that the professional designation is the result of testing and other significant criteria, and requires continuing education. The designation is evidence that the appraiser is a professional and serious about his profession. Contact Official Asset Appraisers for your next equipment or machinery appraisal.

]]> http://realconstructioncost.com/10/10/feed/ Appraisals in Divorce http://realconstructioncost.com/9/appraisals-in-divorce/ http://realconstructioncost.com/9/appraisals-in-divorce/#comments Tue, 18 Mar 2008 01:24:02 +0000 admin http://realconstructioncost.com/9/appraisals-in-divorce/ Divorce Appraisal insist on one. Each year there are 1 million divorces, or about 50% of all marriages (2002 United States Census Bureau statistics). The real tragedy is the financial devastation that happens to many individuals in their divorce.

    Often, a divorcing individual, just to get it over, accepts an unfair settlement. Were they intimidated or pressured to settle? Was there a business Appraisal? Was all the assets accounted for, and were they valued fairly? WAS THERE AN APPRAISAL OF THE ASSETS made BEFORE the divorce settlements?
    We strongly recommend that you insist upon your attorney to have a professional appraisal prior to making a financial decision that may affect the rest of your life. Especially when your business and all of its machinery and equipment are part of the property division. An impartial third party who has now stake in the divorce or business like, Official Asset Appraisers, can give assurance that the value assessed for the Business Valuation appraisal or the physical assets (equipment machinery appraisal), is fair.

Failure to Identify Hidden Assets

    Hopefully, you’re not in a situation where you think there are hidden assets to be included in the settlement. Once a divorce is started, many individuals will do whatever they can to hide what they feel is their money. If they are hidden you can’t get an appraisal on them. There are many resources and methods used by professionals and attorneys to uncover hidden assets so a appraisal can be done. Being aware of these will help you avoid becoming a victum by a dishonest spouse. After there are assets found, they too can be included in the appraisal with the rest of the assets. Often that may include going to hidden locations (other states, or Country), to appraise these assets. Official Asset Appraisers found several pieces of earth moving equipment underneath a pile of wood chips and sawdust one time, where a spouse was trying to hide them from the other spouse. Don’t think that it is always one gender that is guilty of these tactics. It was a woman that hid the equipment under the sawdust. Its not always men, women are just as bad.
    The best way to avoid all of these issues is to have your assets appraised on your own at least once every 2 or 3 years. Including your liquid assets as well, they are just as important as you real property. The money you spend on an appraisal is nothing compared to the tens of thousands you could give up by letting someone else guess at what your assets are worth.
    The bottom line is don’t settle until you know how it will affect your financial future get an appraisal done! Have your assets appraised by Official Asset Appraisers, and be able sleep afterwards.
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]]> http://realconstructioncost.com/9/appraisals-in-divorce/feed/ Demolition, a cost no one thinks about until disaster strikes! http://realconstructioncost.com/8/demolition-a-cost-no-one-thinks-about-until-disaster-strikes/ http://realconstructioncost.com/8/demolition-a-cost-no-one-thinks-about-until-disaster-strikes/#comments Sun, 09 Mar 2008 03:33:29 +0000 admin http://realconstructioncost.com/8/demolition-a-cost-no-one-thinks-about-until-disaster-strikes/ There are so many different variables to the problem of demolition that you may have for your particular demolition situation, that this issue can be nearly impossible to address.
There are a wide variety of questions involved with demolition to give a good answer. Are there environmental issues? Asbestos?  Buried fuel tanks?  Chemical spills or even tar run-off from burned tires?  What are you intending to do with the debris? Can any portion of the foundation remain or will you require everything to be removed? Is there anything salvageable that might have value and offset the costs? What is the construction method? Does demolition include removal of asphalt or just the building? Is site restoration part of the project?
The demolition of certain parts of a building and equipment does not necessarily involve destroying the entire structure.  Sometimes, the exterior/interior walls, floors, equipment and ceilings may not be damaged.
There are also many issues in real demolition costs that you really have to take them on one at a time. You can’t see these demolition costs when you are thinking about purchasing insurance for your building, but you might want to consider some of the issues described in this article to keep you aware of demolition costs as part of your real construction cost.
The cost of most demolition permits is relatively inexpensive running between $15 and $25. Sometimes, there are additional fees in demolition for things such as inspection of the power disconnection and to cap off water and sewer lines at the property.
In addition, a permit for encroachment may be necessary to abandon the sewer line at the main.   A licensed plumbing contractor will be needed for this.
Municipal fees may be collected if the property will be developed in a timely manner.  The water will have to be shut off at the property boundary.  However, if the property will not be developed after demolition, you can shut off the water at the main.
How does this apply to you?  You need Official Asset Appraisers to examine your particular situation to determine the demolition costs which you will require in defining your real construction costs.  Otherwise, you could be spending too much money on premiums, or not enough. Either way these issues will be covered when you call Official Asset Appraisers to answer your questions, and appraise your building for the Real Construction Cost.
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]]> http://realconstructioncost.com/8/demolition-a-cost-no-one-thinks-about-until-disaster-strikes/feed/ Disaster Strikes, will my Insurance Cover Inflation Cost? http://realconstructioncost.com/disaster-strikes-will-my-insurance-cover-inflation-cost/ http://realconstructioncost.com/disaster-strikes-will-my-insurance-cover-inflation-cost/#comments Thu, 06 Mar 2008 23:47:46 +0000 admin http://realconstructioncost.com/disaster-strikes-will-my-insurance-cover-inflation-cost/ Disaster Strikes, will my Insurance Cover Inflation Cost to rebuild?
Inflation cost is described as the depreciation of the dollar but there are other Inflation Costs when rebuilding a business. Hurricane Katrina drove up lumber prices that had already risen 3 times in the prior 7 years. China is draining our lumber surplus further driving up the cost to rebuild. A noticeable jump in lumber and building supplies were experienced after 9/11. IF YOUR BUSINESS BUILDING IS INSURED FOR THE SAME AS IT WAS two years ago, YOU CAN’T AFFORD TO REBUILD IF DISASTER STRIKES! The real construction cost to rebuild can be appraised and your business insured properly if you act now.

Real construction cost is a combination of scientific industry approaches that will insure that you receive a valuation that appropriately covers your cost to demolish, rebuild and furnish your present business without getting additional loans or quitting your business.
Your business building needs to be appraised by an accredited appraiser that is experienced in commercial business building construction.

BEWARE:

  • Don’t be lured by a simple square footage equation of rebuilding cost.
  • Don’t use a real estate appraiser who wants to plug the question into their software.

This is a complex appraisal that will require your blueprints or an onsite appraisal to show your insurance company that a real cost appraisal has been certified by an accredited appraiser. Some think replacement cost insurance is the answer, it might have been 8 years ago. Some think the demolition cost is covered by the insurance, it is NOT! Some say fine if there isn’t enough money to rebuild, I will just take the insurance and retire… the real problem is the fine print… if you are underinsured the insurance company CAN give you a cash value of only a portion of the insured amount. Case in point: Harold P. had his business build insured for $378,000, equipment insured for $100,000. When disaster struck, Harold discover that real construction cost were $750,000 and the equipment would be $198,000. Harold was $470,000 short to rebuild his business so he decided to quit and retire. The insurance company arbitrarily decided that since Harold was not going to rebuild, and that he was 50% underinsured, that they would give a cash value of only 50% of the insurance. Harold received a check for only $239,000.

MOST BUSINESS BUILDINGS IN THE US HAVE NOT BEEN PROPERLY INSURED FOR YEARS. Call Paul Fussell Valuations for a Real Construction Cost Appraisal. 29 years experience as a Commercial General Contractor, Senior Professional Appraiser and 2008 – 2009 USPAP approved.

]]> http://realconstructioncost.com/disaster-strikes-will-my-insurance-cover-inflation-cost/feed/ Appraiser for Rebuilding Cost http://realconstructioncost.com/6/6/ http://realconstructioncost.com/6/6/#comments Fri, 29 Feb 2008 01:56:04 +0000 admin http://realconstructioncost.com/6/6/ Appraiser for rebuilding cost of your business building is needed now before disaster strikes leaving your business at risk. In addition to typical risks of theft and fire, natural disaster risks that can cripple any type of business prevail. It is essential that business owners have their buildings appraised by an accredited appraiser that is compliant with the new 2008 USPAP laws and then update their policies often to include improvements, major purchases and increased building costs, according to the Insurance Information Institute (I.I.I.).

Official Asset Appraisers have found that most business owners don’t have the right type of insurance and have vague gaps in their coverage. As a Business owner you should ask yourself these questions;
1. Do we have the right kind of insurance to rebuild our building and replace all of our equipment and personal property? (Your Business Personal Property includes these categories:

  • Furniture and Fixtures,
  • Equipment, machines, computers,
  • Inventory: raw materials, merchandise, work in-progress,
  • Personal property of your employees,

* If you or a tenant have made improvements on the building, were the improvement values added to the policy?)

2. What is the real construction cost and replacement of my equipment, if I had a total loss today?

3. If I as a business owner do not have enough insurance on my business building to rebuild and continue my business, what are my options?

  • Borrow,
  • Build smaller,
  • Take the insurance money and quit the business.***

***If you are under insured by 1/2 (or any percentage) and decide to not rebuild, the insurance company can arbitrarily decide that the cash value you receive is not the insured amount, BUT, 1/2 (or any percentage) the amount your building is under insured!

4. If my business had a disaster does my insurance policy provide for demolition and clean up? Is this paid out of the general rebuild fund? NO! Demolition and clean up is usually not addressed in the insurance policy! Therefore YOU pay for the clean up and disposal of the demolished building out of your pocket.

5. If I have replacement cost insurance, doesn’t that cover all I will need? NO! NO! NO!

Solution:
Get an accredited USPAP compliant appraiser to find out what the real construction cost of your business building will be today! Have Official Asset Appraisers appraise for the total amount to open your doors and continue business after a disaster so that you can adjust your insurance coverage. A desktop appraisal or “guesstimate” of square footage price is a tremendous risk. Only an experienced appraiser that can certify your appraisal should be used for this task. Official Asset Appraisers have 29 years experience as Commercial General Contractor, Graduate of Drafting and Engineering and appraisals. These qualifications will insure that you can circumvent the problem of SURPRISE! … “You have a disaster AND you don’t have the building insured for enough to rebuild!” … Every type of appraisals can be accomplished by Official Asset Appraisers! If you have questions, give us a call.

Phone 480 326 3907.

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]]> http://realconstructioncost.com/6/6/feed/ Demolition Cost? http://realconstructioncost.com/demolition-cost/ http://realconstructioncost.com/demolition-cost/#comments Wed, 27 Feb 2008 15:55:48 +0000 admin http://realconstructioncost.com/demolition-cost/ Demolition Cost are seldom factored into the real construction cost of rebuilding your business building. Few appraisers know how to estimate the cost of cleaning up your building after a disaster so you can rebuild and continue your business. Consequentially the demolition cost will be subtracted from your building insurance fund. Now if you were underinsured because of 9/11, you are even more at a loss because your insurance never included money to clean up the mess before you can start to rebuild.

Since 9/11 building materials have gone up 5 times. Should a disaster claim your business building you will need more funds than the insurance policy will pay. We are beginning to understand that if our business records are on a computer that we need to back up the hard drive OFTEN as hard drives crash. You should give your business build another inspection by a qualified appraiser that specializes in real construction cost that will include demolition cost. This appraisal is much different than a real “estate comp” or a “square footage” estimate to rebuild. Your real construction cost appraiser will give you a turn-key amount that you can have the building and equipment inside replaced and rebuilt without the aid of non-insurance funds.

If you need to know more about demolition cost or why “replacement cost” will not rebuild your building, call the expert. Paul Fussell Valuations, Senior Professional Appraiser, 29 years Commercial General Contractor, Graduate Architectural Drawing and engineering, 2008-2009 USPAP compliant. Phone: 480 326 3907


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