Many real estate professionals have mixed feelings about Zillow.com. On the one hand, it is an amazing source of data and it can help to educate both buyers and sellers about what is happening in local real estate markets. But on the other hand, Zillow's algorithms are far from perfect and quite often, these "Zestimates" of value can be off by 10% or more.
For example, Zillow's information is based on what is available in public records. But what if someone finished a basement without pulling permits? Should Zillow not award any additional value for the work that was completed?
And because Zillow places an emphasis on geographic sales activity, some higher end communities get undercut by sales in neighboring subdivisions with smaller, less expensive homes. Conversely, many smaller subdivisions "piggyback" their way to higher valuations by being close to more expensive subdivisions, or worse yet, McMansions, which universally are the worst performing category of home on the market today.
I do love the aerial photos on Zillow, and I also like that they will report recent sales data (although that sales data does not reflect seller concessions, whether the property was bank-owned, and other important pieces of information). The bottom line is that the world is a better place with Zillow in it, but just realize that much of the data is raw and it's algorithms cannot universally be trusted.