I'm frequently asked about Zillow's "Zestimates" of property value.  How accurate are they?  The answer - they are not accurate at all.  They can be too high and they can be too low.  These are automated computer generated valuations - obviously no one has seen the house - and seeing the house is very important.  The most important factor in valuation is location.  What is the street like?  Is it a quiet cul-de-sac or a busy street?  Does it back to a highway?  What are the surrounding land uses?  Are there commercial properties all around?  What are the neighbors like?  Do they keep up their properties?

And what about the house itself?  How is it maintained?  Are there any updates?  Hardwood floors?  Granite countertops?  What type of air conditioning?  What is the floor plan like? And the list goes on and on.  You get the idea.  None of these factors are taken into consideration.

So why are there Zestimates?  To get your attention.  To draw you to the site.  To give you something to talk about.  I would consider them for entertainment purposes only but don't rely on them.  If they were so accurate, why are appraisals required?  Because banks want someone who is going to value the property to actually see it.

Automated valuation models are going to get more popular in the future as others try to compete with Zillow.  I wouldn't put much weight in any of them.  None of them are going to replace a person going to a property and actually taking a look at it.