That's a really good point. The people most likely to sell to zillow, after all, are going to be the people who think zillow's price is way more than it should

That's a really good point. The people most likely to sell to zillow, after all, are going to be the people who think zillow's price is way more than it should be! En masse buying of buildings based on algorithmic pricing may be doomed because of this. Even if you're on the mark 80% of the time, under-estimate 10% and over-estimate 10% -- the 10% where you over-estimated will be the people most eager to sell to you! Which is true for anyone in the property business, but if they didn't have local people who understood the market actually looking at the individual property and being like "uh, that one is next to a railroad track which the algorithm doesn't seem to be accounting for..." those people realized they hit the jackpot when zillow offered them a price as if they were NOT next to a railroad track!