Understanding the "Value" of a Property

Whether you are looking to purchase property, sell property or just like to keep up with the market for sport, it is important to understand how property is valued.

The market value of a home is ultimately established when a buyer submits an offer to purchase the home. This offer shows what an active buyer is willing to pay for your home at a given point in time. Every other "valuation" is an estimate or projection of value. 
In the absence of an active buyer making an offer on your property to establish the market value, there are other avenues to try to get a rough estimate of your homes present value.
Valuation by an Appraiser:
Used primarily during the mortgage process, certified appraisers are available to conduct property appraisals. The charges are typically around $200+. Predominantly, these appraisers are there to determine if your property is worth the amount the loan will be written for and consider square footage, design, finish levels, floor plan, construction neighborhood and availability of transportation, shopping and schools proximity. Appraisers also take lot size, topography, view and landscaping into account. These appraisals generally come in very close to the purchase price unless there is a considerable discrepancy.
Comparative Market Analysis by a Realtor:
Given that Realtors are generally very well versed on what homes are selling for through their support of buyers and/or sellers, they are a great and affordable resource to use (affordable = typically free with realtors). A comparative market analysis will provide an estimation of worth based on sales of comparable properties as well as the landscape of currently listed properties. A realtor who is good at home valuations will tend to do more analysis on the property than simply running and presenting a list of solds/actives/pendings. They should look at the dynamics of the community and market as well as do a deeper assessment of properties including walking through properties that are available to view.
Self-Service Valuation:
You can do your own cost comparison by looking up recent sales of comparable properties in public records. These records are available at local recorder or assessor offices, through private real estate information companies or on the Internet. There are also online web pages that will deliver an immediate home valuation for you. Use these with caution as they are straight algorithms from sales with no consideration for the factors that influence a home's value (finishes, lot details, etc). Often, these websites are simply in place to capture your information and provide it to a realtor.
Information is powerful... but it is also important to understand the basis for that information to put it into context. If you ever wish to engage a realtor to do a comparative market analysis (aka home valuation), I would be delighted to do one for you. My experience as a six sigma black belt when I worked for GE allowed me to develop a strong analytical/statistical foundation that serves me well with home valuations.