But here's the rub: an appraiser may provide their professional opinion through analysis and experience, but they do not create a property's value.  Instead, market value is based on the philosophy of "what the market will bear." Translated, that means what people are willing to pay and what price a seller willing to accept.

In the most traditional sense real estate market value is about speculation, pure and simple. Speculation is the probable price a property will sell for in a competitive open market under any condition at a fair price. Ideally, if a house is in good condition, the layout is pleasing and it's favorably located, a house is usually only on the market for a few months. If it sells within that time it's probably fairly priced. If it doesn't, a reasonable assumption is that the price most likely is too high, and the price needs to be renegotiated for a sale to occur. 

Many real estate brokers will purposely set a price higher than the neighborhood market will bear. Initially, most sellers are only too willing to encourage their broker to do this because; well ... who doesn't want to get the most money they can for their home? Unfortunately, this M.O. may drag on for months and months. Great expectations can turn into disappointment. Eventually, even for sellers who have deep pockets will get tired of shelling out money for two homes.

In all fairness, greedy sellers are not the only ones to blame. As an investor, both seller and buyer have to memorize a lot information regarding people (brokers), places (neighborhoods) and things (legal documents and mortgages). And they have to learn to comprehend the language of real estate legalize. In other words, they have to be able to know what information is beneficial to themselves in order to discern the true value of the property in question.

For newbie investors the term market value can be tricky, confusing, and as many recent subprime buyers have learned - deceptive. But the latter is another story for another day. One of the best ways to understand pricing and value is to look into "comps"- or comparables.

According to Wikipedia , the online oracle, there are five factors to pay attention to with comparables: property, financing, and marketing  conditions, as well as locational and physical comparability. But the best "comp" often lies with the property itself.  In the simplest language the true market value is not what the appraisers, brokers, or even neighbor have to say, but what price the buyer and seller finally agree upon and close the sale.   

Another questionable marketing strategy newbie investors should be leery and exercise extreme caution with is "Bargain property." This when a claim is made that a house has been appraised at a higher price its being sold for - often the lower price seems too good to be true - more often it is.  There are cases in where this strategy is necessary, a divorce or foreclosure.

On the other hand, sometimes sellers chance upon the house of their dreams at a steal. For instance, a property you've had your eye for a long time is dropped from an appraised $250,000 to $150,000. The comp has been already been established for this house. No matter what the appraisals state the value of the property is $150,000. Whoo-hoo - lucky you!

Overall, keep the facts in mind. Do not buy a house for its appraised value without first doing background checks. For instance see if the property has been previously listed, re-listed, or sold helps you, as an investor, know the true value of the home. Steady attention to the real estate business and effort as an investor will help you do your homework on the subject property at hand. Remember, with real estate it doesn't pay to be ignorant.