WHAT IS MARKET VALUE?
Market value is the price a property is expected to sell for between a willing seller and a willing buyer after reasonable time and exposure to the market. (UBC faculty of Commerce)
The definition above comes from the Real Estate Salesman's Pre-Licensing Course. Notice that market value is a projection (expected to sell for), it must be an arm's-length type of sale and must expect to have adequate marketing exposure. Adequate exposure depends on the conditions at the time and arm's-length precludes sales like foreclosures and sales within family.
Most important it is a projection of expected sale price. Market Value is derived by looking at similar properties that have sold since the last change in the market, which could be 3 months or 3 weeks, and adjusting those sale prices to reflect the atributes of the property being assessed. By using four good comparables, an accurate price range can be determined.
At the end of the day, however, the Buyer determines sale price. A property sells to the highest bidder, if no one bids higher and exposure has been achieved, then that is market value. Sometimes the highest bidder is the Seller, in other words the Seller puts more value in the property than any Buyer who offered on it. This value is not market value and the property has not sold.
In an active market, Realtors will analyze a property and determine what statistically is fair comparable value, but they may feel that the Seller can get a price higher than defined value. If the Seller does get a higher value, the Realtor's initial value assessment isn't wrong, he's just pushed the market to the next level. The next Seller's assessment will reflect the new higher value the current Seller achieved. Thus is created the rising market. The same can hold true for a falling market. Value is determined by what the best Buyer will pay.
A good Realtor will present an assessed value demonstrate how it is achieved and then advise where to place the home on the market based on what the market is doing, not neccessarily on what the value is at the time.