Residential Appraiser Trainee

John Liss, 33-year-old CEO of True Footage, has launched Kelley Blue Book Homes nationally across 11 states. The platform targets two key groups: baby boomers relocating near grandchildren, who account for roughly 42% of purchases and 55% of sales nationally, and older millennials selling their first homes. True Footage claims its TrueTracts appraisal engine can value homes within 3% of eventual sale price. The company generates revenue by selling estate agents subscriptions to "own" shares of ZIP codes, giving them first access to leads. However, KBB Homes' valuations are classified as broker price opinions, not certified appraisals. The business model raises questions about independence, as agents paying for exclusive territory rights have financial interest in local transactions.

The ROAD ahead for build-to-rent. Last week Kelley Blue Book entered the real estate space by launching Kelley Blue Book Homes, a home valuation platform for consumers and another lead generation tool for real estate professionals. While Russ Cofano, a co-founder of Alloy Advisors feels that the industry "needs another lead generation platform like it needs a hole in the head," he does find the new offering, which is a joint venture between valuation and appraisal technology firm True Footage and Kelley Blue Book parent company Cox Enterprises, to be interesting. "So far no portal, not even Zillow, has nailed seller lead generation," Cofano said. "Zillow created the Zestimate as a way of creating a two-sided marketplace with buyers and sellers and a lot of homeowners still go to Zillow to look at the Zestimate on their home, but Zillow has not been able to monetize that in the same way they have monetized buyer leads." Who is the competition? One party Cofano believes will be watching Kelley Blue Book Homes closely is Rocket Companies, which purchased Redfin and mortgage servicer Mr. Cooper last year. "Rocket-Redfin is going to be looking at this and determining whether this type of human-aided, valuation, seller-intent model can actually generate listings and if it does, who is going to have the most sellers coming through their pipeline to really expand something like this? Rocket," he said. Like Cofano, Craig McClelland, a partner at McClelland & Hahn Consulting, sees Kelley Blue Book Homes not as competing with Zillow, but with mortgage servicers. "The mortgage servicers are out there talking to their database, which are consumers that own homes, telling them how much their property is worth because maybe they are interested in a HELOC or refinancing or maybe even selling," McClelland said. "For decades now these companies have been creating automated valuation models and putting them in front of their customers' faces to try to create business, so this is really who Kelley Blue Book is competing against." Up against the big dogs. While Amit Kulkarni, the other co-founder of Alloy Advisors, agrees that this is something mortgage services and especially Rocket will be watching closely to see if it worth putting their own spin on a similar product, he questions why a company would want to enter a space with such established players. "I question the viability of the model because why are you different or better than a Lending Tree or Rocket?" Kulkarni said. "It is very hard to come into an established mature category with a product that is not differentiated from those that already exist." Kulkarni said he currently sees the real estate space as an overcrowded watering hole in the Sahara during a drought. "All the antelope, zebras, lion, giraffes and rhinos are around this tiny little puddle of water trying to suck out the last bit of moisture so they can stay alive - that is what the industry feels like to me," Kulkarni said. "There are a finite number of transactions and more and more animals coming to this transaction watering hole all trying to drink from this very finite number of transactions. What puzzles me is that everyone is launching these new initiatives, but none of them are going to add a single transaction to the mix, they are just trying to further extract value from what already exists." Citing data from the National Association of Realtors (NAR), Kulkarni said typically two-thirds of sellers find their real estate agent as a referral from a friend or family member. This leaves just 33% of all home sellers available on the open market, which he said greatly limits Kelley Blue Book Homes' pool of potential seller leads to send to agents who are part of the lead generation platform. "It quite honestly just doesn't make a whole lot of sense to me especially because I don't see this product being differentiated enough that people are going to flock to it," Kulkarni said. McClelland added that just because the industry adds 20% more lead sources doesn't mean that the industry suddenly has 20% more leads. "It is just a new delivery system delivering the same lead," McClelland said. "How many different paths can you take to get to the same lead?" However, if Kelley Blue Book Homes can find a way via company or data provider partnerships to make itself the gold standard in property valuations, just like it is in car valuations, Kulkarni could see a path toward success for the venture. Making a splash. As Cofano looks to see what impact Kelley Blue Book Homes may have on the future of the real estate industry, his primary question is whether you can take a brand that is highly regarded and trusted outside of the real estate industry and marry it with a seller-intent model and an automated valuation model to create a seller lead generation platform that is better than what is already out there. McClelland shares a similar view. "Just because you do a great job valuing my 2002 Toyota Sentra, doesn't mean that you can tell me what my 2017, seven bedroom, four and a half bathroom, 4,500 square foot house is worth," he said. "Companies entering a new space live and die by their customer acquisition costs, and they are going to war against the mortgage servicers here. I think this is a much bigger play than people are anticipating." Regardless of whether or not Kelley Blue Book Homes succeeds in this endeavor, Kulkarni is excited to see non-traditional real estate firms entering the industry, and he is looking forward to seeing the ideas and innovations players like Kelley Blue Book bring to housing. "Everyone is focusing on monetizing the agent and it feels like a lot of the consumer stuff has been forgotten because everyone is out there trying to make the agent the center of the universe when it should be the consumer, because ultimately they are the one that pays the bill," Kulkarni said. "The newer companies that are coming in that are completely unfettered by relationships or other constraints are going to be able to innovate and do things differently. I'm really hoping that we are going to see some real innovation here over the next 18 to 36 months."