I got asked to write a rent/price estimator, though not one for use by consumers, back ~2011 or so. I refused because I couldn't spend more than a month on it, it's a harder problem than "I know some statistics and I have a month", and it was so going to come back to bite us. There were shouting matches. You have no idea how satisfying forwarding every post I come across on the Zillow lawsuit to my old boss is.
Redfin just spelunks the MLS and reiterates. The minute it sees a bidding war or an encumbrance it shits the bed, as is appropriate. They also define "accurate" in a truly broad way: "We're within 3% two thirds of the time." So. For that one in three house that doesn't conform to the maxims of the MLS, they can be off $150k no problem. I also think their algorithm favors "asking price" more than anything else and is just cranking through to see whether offers are lower or higher per zip code/territory. I'm watching one property whose price dropped from $495k to $245k when it was revealed that the hillside it was on was about to fall into the ocean and it'd take heinous amounts of civil engineering to return the house to a livable state. Redfin merrily put an estimate within 3% of both prices and didn't bat an eye. Zillow thinks it's about "blue doors."