It is possible for market value to differ from the actual cost of a property. This depends on a number of factors such as physical deterioration, exterior influences, geography, national and local economic changes, or other things. A licensed or certified appraiser takes into account all these influences when arriving at an opinion of market value.
For example: A home cost $200,000 to build in a small community. A new big employer moves into town bringing in hundreds of jobs. Demand for homes increases and the property value rises to $220,000.
For example: A home cost $200,000 to build in a small community. All homes in the area have neutral color paint and granite counter tops. An artist buys a home and repaints some walls purple, and spends $10,000 to replace the counters with custom shaped concrete counters. The market value of the home decreases to $180,000. This is because the average buyer would need to “remedy” the home by painting and replacing the counters to bring it back to the market norm. Therefore an average buyer would discount the home by the cost to remedy the home.
Remember just because you spend money on a home doesn’t mean you’ll get the dollar-for-dollar price out of it.