I have had both our homes (we rent one out) independently estimated and both are worth 25-30% more than the Zestimate. I live in IL like the realtor in the article. Zillow is consistently lower than other sites. The most accurate estimates for our home are on Redfin, which is almost perfectly inline with the appraiser's estimates. Zillow has a pretty overfit model IMO.
This is the flaw here. The seller, real estate agent, banker, and appraiser all have incentives to raise the price of the home. The only person in the transaction who doesn't is the buyer. I've been working on something in this area as a side project, and have been working with the fallout of 2008 in my day job, since 2008... and it continues to this day and the lack of understanding of the incentives here is the main issue. If Zillow wanted to gain customers through their zestimates they would raise the estimate not lower it. After all, more people own homes then are buying one in any given moment. Telling those people how smart they are that they timed the market is a much better way to retain users.
I have different problems. Zillow's estimate is about 15% higher than Redfin for us. But there's also issues with the facts each have about our home. Zillow's estimate also goes up and down by tens of thousands of dollars per week. Some weeks it'll be as much as a $40,000 swing.
Keeping the data correct on the sites is also a chore, and if I don't keep on top of both sites, entire rooms or bathrooms will come and go, square footage will change and so on.
Real estate agents will claim that appraisers don't go off of these sites, but buyers will use them as pricing information so it almost becomes critical for home owners to police these sites to get as favorable an estimate as possible.
