My main complaint is that Zillow doesn't acknowledge these problems within their system and many people who use they system don't understand that the information they are recieving is not accurate. It is impossible to establish the value of a property without actually viewing the home and having knowledge about other homes in the area.
"I looked up my home's value on Zillow and..." has become my least favorite phrase as of lately. Just the other day, I worked for several hours on a CMA, and presented a price range of $375k - $389k. After actually touring the home and seeing things like the master bedroom was really large for the area and type of house, that the electrical panel had been upgraded, recessed lighting in the living room, neutral decor, and new high-quality granite counters in the kitchen, I felt confident in my analysis and suggested a listing price on the high side of the range at $385k. "But Zillow says my house is worth $428k!"
Zillow.com is a site that, by using some proprietary combination of databases, algorithms, and who knows what else give a "Zestimate" of a property's value. Yep - it's the magic pill for some, and the poison pill for me. What Zillow does not take into account: remodeling, upgrades, views, landscaping, nearby schools, unique architecture, a recent death on the property, the crack house next door, smell, traffic noise, a main/busy street, funky wallpaper, barking dogs, etc.
Doing a CMA is really an art rather than a science.
I will give credit where credit is due though - Zillow does have some neat mapping features, which I will admit are pretty useful.
I use Zillow in my day to day job (as an architect) to find out the property information and a bird's eye photo of the property before I meet with a potential client.
However, in my experience the pricing trend graph can be very helpful and seems to be accurate a lot more frequently then the Zestimate. In combination with a comparative market analysis I think the zillow market trend feature has the potential to be a very helpful asset to today's sellers.
In short, Zillow is like a cute little gremlin... handle with care. =D
Zillow's an interesting tool and fun to look at. However the October 06 possible equal housing suit filed against it gave me pause. The filers indicate that Zillow may have been using data that may be discriminatory.
As a Realtor, the concern about the maintenance and high standards set by the Fair Housing and Equal Opportunity Act is a primary concern to me.
I know that Zillow does not have current data, or an ability to view neighborhoods and know local conditions. That is the value of a hands-on Realtor (R).