When I use Zillow and check the Zestimate, for various properties, it seems to be super far off. If they used it for speculative property purchases, I can imagine that would go terribly wrong.
If you're interested in the method they use to calculate the Zestimate, one of their data scientists did an interview back in 2017 (before the home buying started) that talked about the factors involved.
Recently had an appraisal for refinance. The appraiser's estimate was <5% increase from the 16 months earlier when we purchased even though we bought during March 2020 at the height of uncertainty and at a substantial discount.
The reason? No comparable homes that were recently sold AND available via MLS (private sales are ignored). The rules for appraisals breakdown when there is no liquidity. At least Zillow still considered private sales. The Zestimate was much more correct than the "expert" appraiser.
