Buying a Home? Ask if the Seller has a Clue

Depending on how many times you’ve done it, buying a home can be a stressful thing, even if it’s fun as well. There are all of those documents, inspections, deadlines, loan and insurance applications, and more. If you’re buying an existing home, the inspections are important, as you don’t want to buy a major problem.

Something your real estate agent may not mention, as it’s not on a lot of their checklists, is the C.L.U.E.

Report for the home. That stands for Comprehensive Loss Underwriting Exchange. Home insurers cooperate and share their claims data through this exchange. Here are a couple of scary statistics:

• 86% of home buyers are unaware that insurers use the past home claims history to set rates for policies. This is critically important if you’re buying as much home as you can afford and do not want the surprise of a higher insurance premium than you expected.
• 84% of homebuyers do not request the report from sellers, mostly because they don’t know about it and aren’t told in the buying process.

Five years of back claims data is available in the C.L.U.E. Report. Only the homeowner can request it, and they are allowed one free report per year. Even if they must purchase it, the price is just $19.95. Virtually every claim in that period is recorded and in the report, including claims for:

• Storm damage
• Water damage (leaks, plumbing, failures, etc.)
• Water infiltration (into basements, around slabs, etc.)
• Fire damage
• Smoke damage
• Hail damage
• Any structural damage

One claim that few insurers are willing to cover these days is mold. After some gigantic claims for mold removal (called remediation), many insurers no longer cover it. However, if there was a claim for water damage, particularly if walls, ceilings, or flooring were involved, mold is always a concern. You don’t want to get to the closing table and see that your escrow account is requiring a much higher cost for insurance than you expected.

Though it seems logical that real estate listing agent should have their seller order a C.L.U.E. report when they list their home, very few do so. They may not put it on their checklist, but you definitely want it on yours.