First: Joe is a Zillow shareholder. Zillow is here to stay as it advances residential real estate on the Web. But indeed, Zillow's pioneering Zestimates are wildly inaccurate — even Zillow acknowledges that — as they HAVE TO BE. Algorithms can't factor in all of the variables (because there are a LOT!). Can't, can't, can't. But Zillow and others (most recently Redfin) are advancing the algorithms, as expected, so they all keep inching closer to some semblance of accuracy.
Some customers say they automatically assume Zestimates are always high. As if intentionally. As in conspiracy. Sounds like the purported intention would be to pump up values (for some unclear reason). But the inherent inaccuracy is in both directions — too high and too low. In some locatons the Zestmate was low 70% of the time.
It's also worth noting that the 8% is the national average. In a Maryland county, Zestimates missed what the market actually paid by an average of 42%.
Zillow's CEO says to treat the Z-estimates as "a starting point" for full discussions and research by a local real estate professional to better zero in on what the market value will be.