I recently attended a trade show where the two most popular questions at the Zillow booth were 1) Where do you get your data and 2) How accurate are your Zestimates?
Data - We get data from a number of sources, but the most popular place is from county records. In some counties this is great, in others (especially in non-disclosure states) the data is very weak and we have to turn elsewhere. Of particular note to Agents- we also get data from listing feeds. Say the county said a home had 3 bedrooms, but when you post the listing on Zillow you say it has 4. We will override he county data with your information, as we figure you are the more reliable source, and the Zestimate could change based on this. If you want to read more about the Zestimate, please visit What's A Zestimate Value.
Accuracy - We constantly monitor how accurate the Zestimates are by comparing them to closed transaction data on the day the property sells. By looking at the deltas that exist between the Zestimates and the sold prices, we can conclude our median err (or accuracy) rate. We then publish these figures across all counties. We are the only AVM (automated valuation model) to be publically transparent about our accuracy rates. On this chart you'll also see the percent of times that the Zestimate was with 5, 10 or 20% of the sales price.
This Accuracy Chart can be found at the bottom of all Zillow pages as a light gray link called Zestimate Values & Accuracy. Click on the link, then click on States/Counties and scroll to your area. So when we were asked this question, we simply went to the Accuracy Chart, looked up the accuracy rate, and gave a straight answer.
This accuracy rate can also effort the Value Range we have on many of the 80 million homes found on Zillow. If the accuracy is low, the value range spread may be much wider than if the accuracy were high. Having the value range on properties at all is a good indication to folks that the Zestimate isn't an appraisal, but rather a starting point and thus the need for a range.
Many Agents said this chart was very helpful because they work with clients who will say "but Zillow said..." about a home's particular price. Now they can come back and say "but Zillow also said that they have an err rate of XX% in our county" and have the numbers to prove this.