Anybody can evaluate a tract home with accuracy - the custom homes are much tougher, and depend more on personal visits. If you are in a custom area, hit the open houses (sellers and buyers)!
An excerpt from USAToday.com:
Zillow employs a team of economists who contribute to the Zillow Real Estate blog and release market data that competes with similar research from Case Shiller and others.
The company makes no money off the data but does it for audience growth. “We have a $10-million-a-year expense item for all this,” Rascoff says. “It goes much beyond PR,” he says. “This is data analytics.”
For Zillow users, the company’s trademark “Zestimate” is a way to gauge how much a home is worth. The company produces 110 million Zestimates three times a week, Rascoff says.
The margin for error can vary a lot by region and locale. In San Francisco, “we give ourselves two stars, which is not very good.”
In San Diego, “we give ourselves four stars.”
The wide range has to do with lots of different things, he says, including the quality of underlying data from county records and the like. And the data tends to be less accurate on the high and low ends of the market, because there are fewer comparison homes, or comps.
Still, he says, it’s a pretty good starting point, “considering that we have never been in the home.”
After all, he says, “we call it a Zestimate, not a Zappraisal.”