What Is A C.L.U.E. Report And Why Do You Need One Before Buying A Home?
Finding the right home to buy is never enough. You’ll have to look beyond the physical structure of the property to determine if it’s the right one or not. One of the easiest ways to learn more about a property is to ask for a C.L.U.E. report from the owner of the property.
What exactly is a C.L.U.E. report?
The abbreviation C.L.U.E stands for Comprehensive Loss Underwriting Exchange. It refers to a collection of claims made against a property and stored in a national insurance company database. The report will show a potential buyer the number of insurance claims made against the property in the last five years. It will also show when the claims were made, what type of loss was involved and how much was used to settle the claim or if the claim was denied. All these are crucial data that will be absolutely useful in figuring out hidden problems before buying a property.
So how can you get a C.L.U.E report?
The property owner, or insurer can request for a C.L.U.E. report. So when you’re looking to buy a house and you want to see the property’s C.L.U.E. report, you’ll have to ask the owner of the property to request for it. Similar to a personal credit report, homeowners can request for a C.L.U.E. report free of charge.
Should you request for a C.L.U.E. report before listing your property?
The answer is YES! Adding a copy of a property’s C.L.U.E. report to other required disclosure documents can build trust in the buyer and be used as a crucial selling point. Also, the C.L.U.E. report will show potential buyers that the property has a clean bill of health, if it actually does. So it is better for a seller to request for the report in advance to ensure there are no errors. Also, sellers will have enough time to fix any wrong data before the house is listed.
Why you should request for a C.L.U.E. report before making an offer
It is absolutely right for you to know as much as you can about a home before making up your mind to buy. The report may show larger problems that are hidden from the surface. One of such is mold remediation services, water damage, roof damage, household fires, electrical issue, backed-up septic issue etc.
Nonetheless, if the seller is yet to provide a C.L.U.E report and it will not be available when the offer is made, buyers should consider making their offer contingent based on a clean report.
It is noteworthy to mention that some insurance companies don’t partake in the comprehensive underwriting database. This means any C.L.U.E. report requested from such companies about houses insured by these companies will return blank.
Why buyers need a C.L.U.E. report before closing a transaction
Some of the things disclosed in the report may save a buyer from buying a house that is un-insurable or which may end up being very expensive to insure. Also, a Natural Hazards Disclosure Report will precisely indicate if the home is in a high-risk area. This can also affect the cost of your insurance.
But without the report, potential buyers may not figure out a problem with the property until the deal has been advanced to closing. That’s the point when the insurance cost comes in much higher than anticipated or when the insurance company turn down the request to insure it.