Assessors do not provide accurate market valuation assessments they do ad valorem appraisals. That's why an assessor's assessment is never used for a bank loan. In a commercial appraisal 'brand' and 'good faith' history has value. A 2,000 GBA commercial building with good location, thriving business, etc. will have a much higher market value than a 2,000 sq.ft. warehouse.
I’m not surprised some one like you has never heard of the Financial Times
First of all, for that kind of property in a higher zoned area with rental income, retail income, etc. it's GBA (Gross Building Area) is least important. If there is foot traffic then location would have value. No professional appraiser would even put the most weight for the valuation on GBA. Also, there may be areas in that building not part of GBA per regulations. Public areas, hall ways, lobby etc. Those areas may not have been included in the 10,966 measurement of which the source is not stated. Then curiously the article tries to compare Trump Tower to an apartment building that currently sold for 88 million. That's like comparing a multiplex with a hotel. Oh well....
There is no 'brand game'.........brand is part of the valuation. Look at it this way.....You got 2 hotels, one is owned by a renowned, successful businessman and a celebrity. Famous people stay there, the food is excellent, the services are excellent, etc. The other hotel is owned by a nameless corporation, the food is average, the staff is average and celebrities avoid it. The better brand will attract more money and it's worth more. Bottom line though, the LENDER is the one and only one who makes the decision to lend typically based on their own regulations.
The most bewildering thing is the idea that the person applying for the loan sets the value of the property put up for collateral. Believe me I can't go to the bank and say I need to borrow against my house valued at $500,000. The bank won't accept my word for it or the value an appraiser I hired put on it. They will send out their own appraiser to determine the value of the collateral.
In think unless the feds (fannie mae) are involved the lender doesn't need an appraisal. The main reason you need an appraisal is because fannie mae requires it. The typical SFR appraisal form was made by Fannie mae. (1004 form). In Trump's case, his personal value may have been a factor as well. Many banks will lend on the strength of just equity but the Loan To Value Ratio must fall within their regulations.
Trump valued Mar-a-Lago at between $426.5 million and $612 million. But similar properties in the area recently sold for $170 million. Its not just that property, its also is other his properties with similarly misrepresented value.
It doesn't matter what trump thought the value was. It doesn't even matter if he decided it was worth more. Lending deals at this high level are much more complex and the lender will have a need to be satisfied as to opinion of equity. They could certainly take Trump's assessment into consideration. When you go to get a home loan, the loan agent typically asks you what you think your home is worth. You might have gone on Zillow and have some market data but, that will be reference only. Also, in the lending and appraisal industries, The value is stated as 'opinion of value' 'as of' (Day-Month-Year)
We haven't had anything but a conventional loan for many many years now. And we have NEVER gotten a loan that the bank or other lender did not require an appraisal to make sure the value of the property would cover the amount of the loan. And we have no defaults ever, no bankruptcies, and a credit score in the 800s. The lenders still exercise fiduciary prudence by making sure the collateral is worth more than the loan.
That is 100% correct. Same thing with Trump, it's the lender's call to assure the value before handing over their money. Trump can tell them any value, it's up to them to underwrite the equity.
