"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" -Upton Sinclair
Zillow has an accurate estimate somewhere in their database but it's not in their financial interest to make that estimate public. By low balling, they both gain more buyers and gain more sellers.
>By low balling, they both gain more buyers and gain more sellers.
Just looked up my house, and got a chuckle out of my wife when I told her the zestimate for our house was 61% higher than the price we paid two years ago. Needless to say, we're in not in a "hot" real estate market (i.e. city population ~60,000). The other shady thing it that Zillow says the sold price for the house we sold back then is $20,000 higher than actual sale price. I wonder what percentage of people think Zillow is underestimating vs. overestimating home prices.
When there's a string of bad reviews on Yelp, it's basically Yelp's way of telling the shop owner: "Gee, doesn't it suck that these spammers are bad mouthing your business without actually patronizing it? Well, if you work with us I'm sure we can weed out the spammers and only keep the honest (read: positive) reviews."
In this case, it's: "Gee, it's regrettable that our Zestimate for your house is so low. Only if we had a better source of data. Well, if you work with us I'm sure we can get a better (read: higher) estimate that's more in line with the true value of your house."
The buyers will flock to whichever market maker that advertises the lowest price, in this case Zillow. This in turn forces the seller to choose Zillow as well since that's where most of the buyers are.
Zillow has an accurate estimate somewhere in their database but it's not in their financial interest to make that estimate public. By low balling, they both gain more buyers and gain more sellers.