Most sites with an API have in their API agreement that they can cut you off at anytime with or without reason. Zillow states:
Zillow.com may change, suspend or discontinue the Zillow API and suspend or terminate your use of the Zillow API, Zillow Data, and/or Zillow Brand & Links at any time for any reason, without notice.
They've decided that you were great when you were adding value to them, but now you're a competitor and they're going to shut you down. This is the unfortunate circumstance of relying on services that can change their terms at any time.
I don't agree with the extent that RMS takes the free software argument all the time, but when he talks about cloud computing, this is what he's talking about. Providers are saying, "Don't worry. Leave everything to us. It will be nice and you don't have to maintain anything." It also means that you have no recourse when they decide to change their terms. You become beholden to them and their good graces - sounds like a feudal relationship in a way. Cross your lord and you'll live to regret it.
Really, the worst you can do to them is get them a lot of bad press. Maybe that will swing the power to your side - "attention developers: zillow will just cut you off from their API if they see you as competition." Might make Zillow more amenable to paying you a little more. Lots of sites would jump on publishing such a thing. The FSF or other FOSS advocates might write up stuff as a "warning: don't let this happen to you" about cloud computing. Zillow, I'm sure, would like to avoid their name in that mess - probably to the tune of more money than they're offering now.
Just remember. Enemies threaten; friends warn. Be very nice with Zillow and kinda casually mention that you think you might pitch TechCrunch on the idea of a story about the situation - cutting off API access and all. Remember, you're happy to sell and not mad at them, but that they might not come off looking so nice in the press at $250.