Real estate insiders question how Trump fraud judge valued Mar-a-Lago

By Matt Egan, CNN

New York (CNN Business) — A New York judge ruled last week that former President Donald Trump inflated the value of his Mar-a-Lago estate by an eye-popping 2,300%.

That finding, part of shocking ruling that found Trump and his adult sons liable for fraud, was just one of multiple examples in which Judge Arthur Engoron found the Trump real estate empire to have been grossly inflated in value.

But the Mar-a-Lago finding in particular is raising eyebrows among real estate and legal experts because of the metric Judge Engoron relied on: the county tax assessor’s appraisal value.

“From 2011-2021, the Palm Beach County Assessor appraised the market value of Mar-a-Lago at between $18 million and $27.6 million,” Engoron wrote in his ruling.

The judge noted Trump valued Mar-a-Lago at between $426.5 million and $612 million, “an overvaluation of at least 2,300%, compared to the assessor’s appraisal.”

But it’s widely known that the tax assessor valuation is typically, though not always, less than what a property would command on the open market.

In other words, it’s not an apples-to-apples comparison.

“Appraisal values and market values are just not the same thing. It’s a well-known fact,” said Eli Beracha, chair of the school of real estate at Florida International University. “That’s especially true for properties that are unique. And it’s very easy to argue this is a unique property.”

Dina Goldentayer, executive director of sales at Douglas Elliman in South Florida, said in her experience in the ultra-luxury marketplace the tax assessor’s valuation isn’t considered when trying to value a property.

“He wouldn’t make a very good realtor,” Goldentayer said of the judge. “It’s so widely known that it’s not an accurate determination of market value.”

Goldentayer added, “If there is a ranking as to what would have the lowest valuation, it’s the tax assessor’s office, followed by Zillow and then the realtor’s valuation is the highest.”

It’s not correct to assume that a tax assessment and market value are the same thing, according to Jonathan Miller, president and CEO of Miller Samuel Inc., a real estate appraisal company in New York City.

“They can be, in some markets they are the same thing, but in most others they are not,” Miller said.

Melissa Cintron, partner in the insurance defense and corporate and real estate practice groups at Harrington Ocko & Monk, said it’s “not contestable” that Mar-a-Lago is worth more than $28 million based on improvements and a market analysis.

Of course, just because the tax assessment value used by the judge may have lowballed the value of Mar-a-Lago, doesn’t necessarily mean Trump used a fair valuation for Mar-a-Lago. That point is up for debate.

“It is certainly not clear what the value is,” said Miller. “The test is what the market would suss out for the property. The challenge is that isn’t a single-family house.”

The judge, in his ruling, noted that Trump agreed to use Mar-a-Lago as a social club and that there are restrictions limiting the property’s potential use as a single-family residence.

Typically, realtors, buyers and sellers would try to determine an estimated valuation on a property by comparing it to similar ones that have been recently sold in the same area. But that may not be possible when dealing with a unique property, especially one owned by a famous person and that functions as a private club.

“Mar-a-Lago is such a trophy asset. It’s in a completely different league of its own,” said Goldentayer, the South Florida realtor.

Goldentayer said to come up with a value on Mar-a-Lago, she would hire three independent appraisers and take a blended average of their valuations. She would not use the tax appraiser’s valuation.

Trump and his attorneys have strongly criticized last week’s ruling. Trump attorney Christopher Kise called the ruling “completely disconnected from the facts and governing law.”

Trump accused Engoron of “doing the bidding” of New York Attorney General Letitia James.

However, the ruling was not based solely on Mar-a-Lago. The NY judge found multiple instances of Trump and his adult sons having inflated the value of properties.

For instance, Engoron found that Trump inflated the value of properties at 40 Wall Street and the Seven Springs Estate in Westchester County, NY as well as a golf course in Aberdeen, Scotland.

Notably, Engoron found Trump inflated the size of his triplex apartment at Trump Tower by three times, causing an overvaluation of between $114 million and $207 million.

“A discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud,” Engoron wrote.

Cintron, the Harrington Ocko & Monk partner, doesn’t think the Mar-a-Lago valuation controversy moves the needle on the question of whether Trump committed fraud.

“There is enough of a pattern of this practice that he’s engaged with in respect to his properties to support Judge Engoron’s conclusions that there was an intent to defraud,” Cintron said.

CNN’s Anna Bahney contributed to this report.

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