Appraisal vs Purchase price? Washington, D.C.

[Jon Sheffield]

I have multiple questions but first I am going to give you the information that I have. I live in washington, d.c. and I am looking at a four plex that I saw today in DC while driving. It looked distressed plywood over the windows, grassed uncut, all good signs of a possible motivated seller and good negotiations. I immediately typed in the address in google and zillow gave me the last sold price of $561,500 in 2006. I then went to the tax assessors site for D.C. and the assessment is at $384,500 I also discovered an added bonus of an out of state owner with the deed filled in august 2014. I am going to do more digging to find out more, but my first question is in doing my evaluation since a four plex is still viewed as residential property can I still compare it to the comps in the area which goes from 300k-500k. My second question is can the tax appraisal price be used to dictate what's considered high or low price for a property. I know this is more of an area specific question and will vary, but in doing your do dillegence do you use the tax appraisal in determining purchase price?  

[Kevin Page]

Comps of equal age, size etc is a good method but for small multi family you can also use the income approach where you determine value based on annual income minus expenses. The tax assessors vary in all areas and you can use it as a guideline in making your evaluation but it is only one segment of your determination. In my area the properties are assessed annually but the taxes are paid in arrears, meaning that the assessed value today is based on sales that are a year old.