Kelly's Blue Book Is Coming for Your Home Value
Anyone that knows me even in passing knows that I place almost no faith in a 'Zestimate'. Indeed, I have more faith in my husband's plumbing skills and I threw his plumbing wrenches out years ago. This particular algorithmic approach to home valuation is sometimes famously wide of the mark and Zillow's 'accuracy' figures are meaningless as they are updated by the MLS listing prices and that last 'Zestimate' is the one they measure their accuracy against the final sale price. And that, frankly, is a joke as Zillow is basically using the realtor's listing price against which to measure accuracy, not their original 'Zestimate'.
Now we will have another option as Kelly's Blue Book is getting in on the algorithmic home valuation scene. The end-goal of course is to grab your attention and capture a piece of the pie by being a lead and referral source. Their service will launch in 10 mostly western states: Arizona, California, Colorado, Florida, North Carolina, Nevada, Oregon, Texas, Utah, and Washington. Lead distribution is set to begin August 1st.
Time will tell if the Kelley Blue Book Homes home values are any more reliable than 'Zestimates.' Regardless, they are classified as a broker price opinion, not a licensed appraisal under the Uniform Standards of Professional Appraisal Practice, which limits how the estimate can be used in a formal transaction. One thing I think they will never be is the equivalent to their weight in the used car market. A manufactured product like a car lends itself to this kind of valuation. Homes are so much more difficult. A builder grade kitchen and a custom Italian cabinet Kitchen is something you need to see with your own eyes.
It is really important to note one thing. None of this is solving a problem that was not solved decades ago. Amazon getting a package to my door for something I would spend 3 hours visiting 5 shops to find in a pre-internet age is a problem being solved and a service that is hard to not use even if you think tech companies are getting too powerful. Brokers though know how to value homes, and experienced ones have far more insight than data-driven websites and tend to do a far better job. The objective here is what it always is and it is not consumer-friendly. It is to capture a chunk of the value of real-estate transactions. Consumers are not designed to be the ultimate winners here.
The issue with algorithmic valuations is that aspiring monopolists are placing a public valuation on a home without stepping inside. As an owner you have no control over this. This has become quite contentious. Zillow filed a federal antitrust lawsuit in Chicago against Compass and the Chicago-area Multiple Listing Service (MRED). The dispute centers on private home listings. MRED temporarily cut off Zillow's listing feed, but a federal judge ordered it restored, and both sides are waiting for a ruling on whether the feed will remain active during the lawsuit.
Let's also remember that Zillow failed in their effort to flip homes on an industrial scale using their data and algorithm and ended up losing almost a billion dollars, and laying off 25% of their workforce.
That said, I will be keeping an eye on Kelly Blue Book Homes, especially when it comes to Illinois. I am very happy to say that there are still some things that AI and Big Data are not yet doing as well as humans. I will continue channeling Maverick in Top Gun 2 until my SpaceX stock allows me to buy a rocket ride to my retirement condo at the base of Olympus Mons on Mars.
