I received a call the other day from a Realtor who was representing the seller of a house that I had showed to some of my buyer clients.  I was informed that "the owner just had the house appraised, and the appraisal came in $20,000 above the asking price."  I believe the conclusion that I was supposed to come to was that the house was a great deal, even at the asking price. 

This all started me thinking about the many ways that a value of a house can be defined.  I would argue that the value of a home is NOT (necessarily):

• how much the owner paid for the house
• how much the owner paid, plus the value of the owner's improvements to the house
• the tax assessed value of the house
• the appraised value of the house
• how much the neighbor's house sold for a year ago
• how much the neighbor's house sold for yesterday
• how much the owner needs to sell the house for in order to pay off a mortgage
• how much the owner needs to sell the house for in order to buy their next home

A house is worth what a buyer can and will pay for it, in the current market.

Certainly, this is a bit ambiguous, but my main point is that we can't make any assumptions about what the market value is of a house.