The inaccuracy of Zestimates and the failure of Zillow to make money from their i-buyer program are both reminders that real estate is difficult to price. The standard method used to appraise property is to search out similar structures in nearby neighborhoods and then make adjustments based on the variation in features. This works well when there is significant turnover in property. The market activity provides a number of ways to bracket properties into price ranges.
Things get a little more complicated when the home sits on a premium lot, in particular lakeshore lots. There’s only so much waterfront property. The surcharge for the land is further complicated by the variation in possible approaches to the water. There are steep drop-offs which offer striking elevated views, yet some people don’t wish to tone their calf muscles through stair stepper exercises. There are flat lots where the home is set back to the point of a creating a tunneled view. There are marshy shorelines and pristine-clear-water-over-sand shorelines.
More often there is not a suitable comparable of the complete package of lot and building, so you have to do a separate analysis using the nearby non-lakeshore homes and then adding a premium. Otherwise, you can further afield to a somewhat similar lake and structure and come at a price from that direction. With less data, the span over which the price may settle becomes larger.
In the end an assessment is just an estimate of what the market will bear- the price is ultimately determined between the pool of buyers and the seller.