I finally checked out Zillow today after seeing the NYT article, and the accuracy and inaccuracy of the “Zestimate” surprised me. The details for our current house in Seattle were completely wrong (number of bedrooms, bathrooms, square footage, etc.), as was the last purchase price, but once the details were updated, the estimated value was within $1,000 of the price that we paid. Zillow wasn't out of stealth when we were house hunting, but we did make extensive use of Redfin to look at listings and past sales.
At least from where I sit, I'd use Zillow if I was selling a home and Redfin if I was buying one. Zillow would be useful for setting a price and assessing the values of improvements, although various Seattle-specific strategies (e.g., slight underpricing to encourage competition) would still apply to final pricing. In contrast to Zillow's approximations, Redfin draws straight from the MLS, and the sale prices and dates are dead-on. Redfin also includes the pictures from the MLS for current listings.
Commissions may decrease or switch to flat fees as home prices increase (and services like Redfin's “buy it online” may help force the issue), but I don't know if any amount of Web 2.0 juiciness is going to take away the value of the advocacy of a good realtor. (We had great experiences with Jenny Ames in Chicago and Melissa Veilleux-Kiser in Seattle.)
