Appraised value does not necessarily indicate market value. When a lender orders an appraisal, it wants to verify that its investment is covered, so a large number of appraisals come back showing a value that closely matches the sales price. Appraisers focus on the needs of the lender, and they don't spend a lot of time analyzing a property beyond what's necessary to establish minimum value.
Appraisals don't tell you how much or how quickly a property might increase in value, either over time or with the addition of key improvements. Those are important topics that you must analyze to determine if you have an interest in a property.
Always remember that an appraisal is an opinion. If you order three appraisals from three different appraisers, you're very likely to get three different results. They're usually similar, but sometimes the differences are surprising. Variations are most common when an owner orders multiple appraisals for her own purposes, since the appraiser is starting from scratch — there's no target figure associated with a sales contract.
Appraisers do not verify property boundaries. Unless an encroachment, where a neighboring property owner has built on or too close to your property line, is obvious, it won't be on the appraiser's report, even though it might have a large impact on market value.
The same is true about title issues. An appraisal wouldn't show that a former owner has never relinquished rights to the property, or that two generations ago the owner granted someone a permanent right-of-way across the property. Those issues are usually discovered by an attorney or other title researcher when a sale takes place.
An appraisal does not take the place of an inspection to verify that all components and systems of a structure are in good operating condition. A house or other building that looks great on the surface could turn into a fix-up nightmare for its new owner. Appraisals are a useful tool, but they are just one piece of the puzzle you must assemble in order to determine a property's market value.