Since this is unlikely to be the end of Zillow's ambitions in this area, I foresee an arms race between Zillow and local sellers & their agents:
Just like with SEO, algorithmic home buying will open up the opportunity for people to infer from the algorithms behavior which metrics or keywords it's triggered off of and respond accordingly.
How do you see that? Zillow uses local agents and their sellers to sell houses. There's no battle there. In fact, the sellers get more money from this transition because the artificial price increase positively impacts them.
I don't think Zillow points their agents at it without their own analysis first: I'm assuming Zillow leverages their data set to identify a large portion of opportunities. A local agent on the ground can sort through things with some judgement, but if a lot of their leads are directed to them by Zillow's algorithm for identifying worthy investments then there could be room to game that system.
Just like with SEO, algorithmic home buying will open up the opportunity for people to infer from the algorithms behavior which metrics or keywords it's triggered off of and respond accordingly.