Sales history along with location perimeters are the main factors in determining a market value. In most cases an Appraiser will attempt to pull comparable sold properties from within the same neighborhood as the subject property. Furthermore, they will attempt to find comparable properties from within the neighborhood and within a limited amount of time (say, no further back than 3 to 6 months). If they are unable to find suitable comparable properties within these perimeters they will 1. look beyond the neighborhood 2. look further back in sales history.
Unfortunately, many upgrades done by sellers are not considered in an appraisal. Standards such as Square Footage, Age of Property, Condition of Property, Amenities such as Swimming Pool, Garage (size), etc. are commonly used.
A real estate agent should make it a priority to review the appraisal once complete and contest if there are clear issues with the established market value.