UPDATE: February 2014: Wilmingon, NC MLS stops sending listings to 3rd party sites, such as Zillow and Trulia, citing inaccurate data and deceptive business practices. Read the article here.
UPDATE: November 2013: Zillow is adding transaction histories to agent profiles. Zillow scrapes tax data to formulate their inaccurate Zestimates, and is using this same method to "detect" agent transactions. And according to Zillow, the data they scrape only includes the listing agent, not the buyer's agent. Agents may manually input their past transactions, but how accurate will that be? Do not let Zillow "choose" your agent for you.
UPDATE October 2013: Austin, TX area brokerages pull listings from Zillow and Trulia. Read the article here in this link.
Zillow and Trulia do a great job of marketing to get the general public to visit their sites. Consider these points when searching for real estate on Zillow:
Zillow is not a licensed real estate broker;
Zillow does not have one single employee, or licensed real estate professional, in any local market in the US or Canada;
Zillow has no knowledge of local neighborhood boundaries;
Their real estate values are calculated from an algorithm applied to publicly available tax values. Tax values have nothing to do with market values;
Not one single mortgage lender uses Zillow "zestimates" for property values in a loan appraisal;
Not one single US local municipality uses Zillow data for tax assessments.
Zillow "Zestimates" are just as likely to be too high, as they are to be too low, versus actual MLS sales data.
Zillow is irrelevant, if not downright misleading. Their sole purpose as a business is to sell advertising, not real estate. Zillow exists to attract a large number of potential home buyers and sellers, displaying properties that may not be available for sale, and sell these "leads" to real estate agents and related industries like mortgage lenders, home improvement, and financial institutions. Why? Because prospective home buyers are more likely to be credit worthy and affluent, which is the type of customer companies want to reach with advertising.
As a home buyer, using Zillow data will result in a false impression of our local real estate market, costing you time and money traveling to view area properties and making unrealistic offers. Relying on Zillow "Zestimates" could result in you paying a higher price than recent comparable sales. If you are getting a mortgage, a high "Zestimate" will result in the home not appraising for the negotiated price, and cause you to have to back out of your contract.
As a seller, when you hire me to list your home for sale, I am fully prepared to combat false Zillow data from the day your home hits the market, resulting in a realistic sale price and a quicker sale to educated home buyers. If you try to list your home by owner on Zillow using Zillow "Zestimates", you could be costing yourself money by pricing your home too low.
Below are screen shots of Zillow's statistics for Sarasota for 2011 through 2013.
Sarasota County Median Home Sale Price Zillow vs MLS 2010: Zillow $153,600 Local MLS $135,000 2011: Zillow $130,000 Local MLS $134,900 2012: Zillow $220,900 Local MLS $155,000 2013: Zillow $201,700 Local MLS $184,500