The Winter 2010 edition of "The Appraisal Journal" contains an Abstract titled "Zillow's Estimates of Single-Family Housing Values", comparing Zillow.com's Zestimate of the value of single family homes with the actual sale price of homes sold in Arlington, Texas covering data from 2006. The results are that on average, the Zillow estimate overvalued the studied properties by 10% when compared to the sale price.
There's sure to be a lot of interest in the study.
Read the Appraisal Institute Press Release:
Zillow Values No More Accurate Than Homeowners' Estimates
Read Zillow's explanation: What is a Zestimate?
In our opinion, valuing a property is so much more than just how many bedrooms it has, number of baths, square footage of the house, lot size, updates, etc. While as a Realtor we call it an "estimate" (because we are not licensed appraisers, and therefore, it is not an "appraisal" of value), we know that there is a certain amount of subjective value, intuitive value and value based on external factors that provide us with conclusion of our value estimate.