However the bottom line is, like everything else, supply and demand really determines the Market Value.
All the comps can do is to give the seller a guideline on where to start; once the price is set, we have have to watch very closely what the market truly is, how much supply and demand are there for the same kind of property in the immediate area.
The house can be priced wit the most accurate comps; but it won't do any good unless there happens to be a buyer for that property at that specific time. If not, then the house won't sell. This is one of the reasons why Realtors will suggest the sellers to lower the price after a while, may or may not be the fact that the house is not worth the list price, but it allows a larger pool of buyers to come in and look at the house; where we might increase the demand.
After that, and if the house sells, the new price might become the new market price for similar property at that time.
Where upgrades lose their oomph is when they stray too far out of the range for similar houses. While the 212K house may have had 12k in upgrades to make it worth that much more than its 200K brother, a house with $40,000 in upgrades is unlikely to add anywhere near that much value in comparison to its peers.
Oh the 12 month period is the oldest you could go. - The Realtor and you must give highest weight to the very most recent closed sales, then to older sales, pending sales, and then current active listings. You would reach back 12 months only if there was insufficient recent activity to support a value estimate.
Having said that, there are also times when an area becomes "HOT" in which homes sell for more regardless of the past sales simply because of buying demand...Market Value can also be loosely used to mean what buyers are willing to pay for homes in that area regardless of the documented value. This is why determining a home's value in any capacity is referred to as an "art" and not a science!
Just remember that Market Value is not to be confused with "Assessed Value" (which is what the property appraiser for your county uses to determine taxable value and can be greatly unreliable for many reasons), or "Appraised Value" which used 2 other methods in additon to the comparative sales method to make its determination.