Kristan from Trulia here. We use a bunch of info that our data scientists comb through, including recent sales of similar homes and home facts like beds, baths, square feet and more.
We've written in more detail about Trulia Estimates if you'd like to learn more, http://www.trulia.com/trulia_estimates.
Also if you're the owner, you can claim your home now to make sure we have accurate info and improve our estimates of both your home and your neighbors' too.
Thank you for using Trulia for all of your real estate needs. You may contact us directly at firstname.lastname@example.org if you have any other questions.