First, you have to know who decides the price. That is a very different question than who decides the value. The price is usually decided by the listing Realtor and the seller but more often than not the seller has the last word. Almost all sellers including Realtors when they sell their own homes think their homes are worth more than they are.

Very often price and value are very different figures. What decides the value? It all comes down to supply and demand. There are 2 factors that alter supply and demand as it affects value. First, is the buyer pool at any given time and second is the inventory at any given time. These 2 stats fluctuate daily.

Say for instance today 5 new couples either were pre-approved or sold their existing homes and now need to buy a home between $500,000 and $700,000 in any given area. This will increase the demand for houses in that prices range. Secondly, consider also the six top valued houses between $500,000 and $700,000 in that area just sold. Now the houses that were secondary values have suddenly become the top valued houses in that price range. The value of homes between $500,000 and $700,000 in this area just went up.

This is a hypothetical example but this process is going on in all price ranges and property types to various degrees all the time. This is why a house can be on the market for months and all of a sudden there are 3 offers on it. The values actually changed.