Multifamily Market Value Analysis

[Darion Smith]

How do I determine a good offer for a multifamily unit?

I've been listening to several BP podcasts and reading a few forums and the consensus I get is the value of a MF property is determined by the cash flow it can produce as apposed to a single family property that's valued by what a buyer is willing to spend. Yet I am seeing MF properties in my area way overprice in relation to what fair market rents would suggests they should be. Is that just a function of an agent not understanding how to list MF properties or am I missing something?

I am seeing a 2 unit 3 bed/2 bath for $209,000 and a 3 unit 2 bed/2 bath for $175,000. The later makes since to me and meets all the preliminary tests but the former just  seems way off.