Zillow and Other "Automatic Valuation" Sites (Item 1)

I've always been skeptical of Zillow's home value estimates.  By now most people interested in real estate understand that, at best, Zillow's mechanism for estimating the value of a particular property results in an approximation.  But I think it's worse than that.  I was researching a property for a client this morning.  It's a 1-br/2-ba basic loft condo in SOMA, bank-owned, priced in the mid $400K range.  Zillow says it's worth $100K more than that.

However, a quick search of the MLS shows three sales in the same building within the last six months for similar units (bd, ba, size) in the mid $400K range.  That should put the estimate for this unit at the very low end of what Zillow calls it's "Value Range" which I think should be renamed "Guesstimate Range".  Even a computer program should be able to figure out that recent comparable sales in the same building should be the primary data to use when estimating value.  And there is no recent sales data that would possibly support a value above $600K.

I know that Zillow and all the other "Automatic Valuation" sites have extensive disclaimers such as: "A Zestimate home valuation is Zillow's estimated market value. It is not an appraisal. Use it as a starting point to determine a home's value."  Zillow's own data says that it estimates the final selling price correctly within 10% less than half the time.  It's estimates on three out of ten properties are off by more than 20% compared to the final selling price. 

The problem is that the "starting point" they refer to more often than not is a long and  tedious explanation from your real estate agent about why the estimate should be ignored.