Yes, quality is one of the many variables considered in the appraisal of a home, along with condition, effective age, appeal, design, etc.
Not only the quality of the home being appraised, but also the quality or lack of in the sales comps used in the appraisal.
When a lack of quality or a need for improvements is observed, as an appraiser, I will make a list of deficient issues and what it will cost to
repair them. This cost to cure is then utilized as an adjustment in arriving at an “as is” current market value for the home being appraised.
In my experience buyers do this when making a purchase.
A home might technically be remodeled, but if the work is sub-standard or obviously “do it yourself”, it may not compete with professionally remodeled homes.
When something looks off in a house, it’s a red flag to look at other details more closely.
Buyers are sometimes influenced by flashy ornamentation.
While we may not agree with it, if buyers are paying more for these shiny features rather than something older and so-called better, it is our job as appraisers to recognize the market reaction and take that into consideration in our value.
Log style and Historic homes are also a consideration.
Buyers may pay 15% more for a log style design compared to more conventional construction.
Historic homes like those built by Gus Maltby, in Big Bear, during the 30s and 40s have a mountain charm that many buyers pay a premium for and appreciate.
One last point worth mentioning has to do with quality issues that are below the surface, like 2 x 6 framing, extra insulation, plumbing and electrical
updates, extended life roofing, energy, fire and seismic upgrades beyond current building codes, etc.
In order to determine if buyers are paying more for these upgrades, it is necessary to extensively research the market data rather than make our own assumptions about what the market should and shouldn’t do.
While it is difficult to put a dollar figure on differences in quality, there typically is a range of value of the adjusted market data.
The recognition of a high quality home being appraised is a good justification for favoring the higher end of the value range.
In the final analysis, whether it’s logical or not, it’s the market that gives value and the appraiser is there to reflect the market
reaction and take that into consideration in the appraisal.
Zillow is one of the most popular websites for real estate information. You can enter an address and get an estimate of the home's value called a "Zestimate".
These computer generated value opinions are often taken as gospel and are regularly quoted to real estate agents by buyers to challenge high asking prices and sellers to question low listing prices.
The problem is, the Zestimates are not always accurate, and in resort areas like Big Bear, where every street and house is different, the margin of error can
be large. Zillow uses a computer program to determine the value of a home based on information from public records, which are notorious for being inaccurate, and information entered by users, which may be biased.
It doesn't know the idiosyncrasies of a real estate market , not to mention recent remodeling and updates, interior condition, level of quality and charm, view or proximity to recreational
attractions and shopping. It doesn't know about road noise and traffic, or structural problems and deferred maintenance. As stated in the fine print on the Zillow website
"it is a starting point in determining a home's value and is not an official appraisal".
The Zillow help center goes on to state: "We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as: getting a comparative market analysis (CMA) from a real estate agent, and getting an appraisal
from a professional appraiser..."
I reviewed the recent
sale prices of 3 randomly selected
3 bedroom, 2 bath homes, and compared them to the Zestimate and range of value offered by Zillow:
Sale #1 from Big Bear City sold for $360,000 while the Zestimate was $337,267 and the Zillow range of value $310,354 to $354,000
Sale #2 from Big Bear Lake sold for $193,000 with a Zestimate of $239,709 and the range of value $194,000 to $283,000
Sale #3 from Big Bear Lake sold for 693,000 with a Zestimate of $786,638 and value range of $747,000 to $826,000.
In these examples, the sale price fell outside of the Zillow range with a large difference in the Zestimate and final sale price.
There are studies that demonstrate that Zillow can be reasonably accurate on the value of a home in conforming tract developments.
However, in a resort area like Big Bear, where you have old and new, large and small homes mixed together, the accuracy
can go way down. Pricing a home properly is an art and science. It is not accomplished by trusting a computer generated value whether it is Zillow or some other online valuation tool.
If you want an accurate value of your home, always consult with a local real estate professional or competent appraiser.