Capitalism Embraced

E. German escapee, wife run appraisal firm

REPRINTED FROM THE COMMERCIAL APPEAL

Monday, August 9, 2004

by Mark Watson

In 25,000 square feet of carpeted space above the OfficeMax in Germantown, about 80 people work to help expedite the American dream.

It seems fitting that their company, Valocity, was formed by Carsten Kaaz, who fled Communist tyranny Aug. 3, 1987, by crossing the Berlin Wall.

The firm links lenders with 2,500 appraisers electronically in all 50 states, reduces errors and expedites payments to facilitate the purchase of real estate.

Now a U.S. citizen, Kaaz formed the company in late 1998 with his wife, Bethany, when they noticed serious inefficiencies in the appraisal market.

Bethany had worked in appraisal offices in Atlanta and Memphis, and Kaaz had worked in technology for 10 years with MCI.

"Based on our marriage and also the marriage of our skills, we were able to build a new brand of appraisal company that is completely paperless and Web-based," Carsten said. "Now, that doesn't sound so impressive, but that was in 1998 and 1999."

About half of the workers at the Germantown office joined the company within the past 12 months.

"To put this in perspective, at the end of our first and second year, what we did in monthly volume of appraisals we are now doing in less than one day," Carsten said.

No Valocity employee worked in that location a year ago. Valocity moved in May from about 8,000 square feet of space at Kirby and Bill Morris Parkway.

In that location, it was known as Appraisal Forum.

One key aspect of the business's growth has been the more respectful way in which appraisers are treated, Bethany said. Too often, their services are treated as commodities.

Carsten is the company's executive vice president and chief information officer, while Bethany serves as executive VP and chief operating officer.

Shawn McGowan, who has more than 20 years in the appraisal industry, joined Valocity in January as CEO.

The company was profitable within a few weeks of opening its doors, Carsten said. Venture capitalists bought into the firm in July 2001, and they now own more of it than the Kaazes.

"Bethany and I understood our skills," Carsten said. "We knew, in order to be a dominant player in this space, we needed some leadership that really understands the national scene. So, Shawn, who is seasoned and probably one of the most respected veterans in the industry, was kind enough to join us here in Memphis. "

Valocity has big and small lenders as clients. The biggest is the Bank of America's HomeFocus Valuation Services, which started working with Valocity in early 2003.

"They are our primary vendor," said Carol Kisling, HomeFocus vendor relations manager. "They're responsive to HomeFocus's needs and very knowledgeable in the appraisal business and very accommodating to specific client requirements."

Yet Kaaz's company had operated "under radar" to such an extent that it was not well known nationwide.

Carsten said, "We don't want to stay, indefinitely, underneath the radar screen."

The new office is big enough to handle more than 200 employees and more than 25,000 appraisals a month, Carsten said.

Workers at Valocity recruit appraisers, take in orders for appraisals, assign them to appraisers and ensure all paperwork issues have been resolved, Bethany said.

"We've added more than 20 cubicles since mid-May," she said.

In the summer of 2003, Valocity did about a third of the volume it does today, even though McGowan said rising mortgage rates have slowed home lending.

"I wouldn't be surprised if instead of 80, we could have in excess of 100 to 120 employees over the next 12 to 18 months," McGowan said.

For more information contact:
Shawn McGowan
901.624.3900
smcgowan@valocity.com