Real estate

Most people are not real estate developers like Trump but most people who own their homes understand how real estate works. When a person appraises your home they use what are called comps. These are comparisons between similar homes in your area to determine the value of your home. If these comps indicate that your house is valued at $400,000 then the bank will offer to finance the home at that price with a suitable down payment and proof that the buyer can meet then monthly payment. During times when real estate values are rising it is not uncommon for several buyers to bid on a given property in which case the sale price may be above the appraised value. If the buyer is credit worthy they can get a loan to cover the purchase. Under the right conditions the bank will offer the loan. If a person has exceptional credit the bank may offer the loan at a price considerably higher than the appraised value. In the situation with developers who are selling large shopping malls or high rise office buildings it is not always easy to get comps so the price is settled upon by bargaining between the buyer and the seller and if the bank approves the loan is offered. The seller will puff up the value and the buyer will bargain it down. Trump is being accused of inflating the price of his property but the loans went through and the banks made money.