Trump properties aren't the only ones to see wild valuations – putting a price on real estate isn't straightforward | Health & Fitness

Indeed, research shows many commercial properties are listed for sale with no stated asking price because of the difficulty in determining potential revenue, which can vary based on what a given buyer plans to do with the property.

And sellers do not want to inadvertently underprice their asset. Take, for example, the 2014 sale of the Waldorf Astoria hotel in New York. The buyer, a Chinese company, deliberately paid a higher price than local investors might because they thought they could reap higher income through converting some space into luxury condos for Chinese buyers. The plan ultimately hit some snags, but it nonetheless justified a larger purchase price.

The uncertainty inherent in real estate values also leaves appraisers vulnerable to client influence.

A 2015 study in the U.K. examined appraisal values for institutional real estate funds and found that their valuation methods arbitrarily changed depending on what kinds of valuations the fund clients seemingly preferred.

So what does this all mean for Trump’s properties? Clearly real estate valuations aren’t a science, but it’s not the Wild West either. Appraisers are expected to follow regulatory standards, certification and licensing requirements and professional norms in the valuation of real estate. The question for the courts hearing the case of Trump properties is whether someone failed to follow them.

This article is republished from The Conversation, an independent nonprofit news site dedicated to sharing ideas from academic experts. It was written by: Kimberly Merriman, UMass Lowell. Like this article? subscribe to our weekly newsletter.

Kimberly Merriman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.