Like 4-plex says a decent place with some unpermitted stuff is quite different from a dump with a cracked slab and a pool sliding down into a ravine. Even so, in many cases the seller just prefers an “as is” cash buyer vs possible complications of selling a fixer with unpermitted work.
The appraiser looks at the quality and quantity of the work and compares it to what is the legal square footage and description on the tax rolls. If it all looks like it’s done in a “craftsman like” manner or better it will be a wash in the appraised value not a valuation positive. They will only comp out legally permitted square footage. Sometimes I think this makes perfect sense but then I think there should be a deduction for unpermitted work, additions and illegal granny flats especially, regardless or how good they look.
Buyers should always be aware that they can face consequences from unpermitted work if it is reported to the authorities later. It also has to be disclosed at selling again. Many people feel justified in just staying away from this kind of property, for these reasons and for fear that even if the work looks good it could be shoddy underneath.
Be careful of open code compliance cases. I have had fixer buyers take properties with known or discovered code compliance issues and get financing. In one case the county was recording liens for fines which had been submitted to Revenue and Recovery. It was nearly 10K for a unpermitted shed on an unoccupied REO. The shed had to be torn down.
We made the seller pay for the liens, tear down the shed and close the case, since they had not disclosed it.