Why would records show a home sold for 6x its market value?

[Devin Wilkinson]

While analyzing a property I looked up the tax records to see the tax appraisal and how much it was last bought for. This house is a 2 BR 1 Bath house in Johnson City, TN and approximately 1,000 sq ft. Johnson City is fairly "ordinary" and doesn't have a really high home prices like LA or San Francisco.

I found the following sales data:

2000 - $35,000

2001 - 35,740

2004 - $385,000

2011 - $249,909

The total market appraisal on the taxes (I know that market appraisal isn't the most accurate but its usually in the ball park) is $56,700.

Why would someone buy the house for so much more than its worth? Is there some kind of tax benefit from it if you do this when selling to a family member or something? I've looked at 100's of tax records and never seen anything like it. I'm very confused and would like to know if anybody has any ideas on why something like this would happen.

[Kevin S.]

@Devin Wilkinson not sure about the tax records in TN, but here where I'm at you see this occasionally when someone buys a bunch of properties in a bundle, i.e. the $249,909 may represent this property and several others all sold at the same time and of that only approximately $56,700 is truly allocated to this property.