Before purchasing a new rental, you’ll want to inspect the property and investigate any potential issues. However, before that step, some buyers request a Comprehensive Loss Underwriting Exchange (CLUE) report from the sellers. A CLUE report indicates any previous insurance claims for damages, thefts, and more. If you’re unfamiliar with a CLUE report in real estate and how to get one, read along as we go over the basics.
Contents of This Article:
- What is a CLUE Report in Real Estate?
- Importance of a CLUE Report in Real Estate
- What to Do With a CLUE Report
- Don’t Skip Out on a Proper Inspection
- Keep Your Records Straight with Property Management
What Information Is on a CLUE Report?
Requesting property records and keeping them straight is a major responsibility for landlords and Washington DC, property managers. That said, one of the most important files to keep on hand is a CLUE report.
A CLUE report in real estate gathers insurance information about a property. For example, any insurance claims made on a property within the last seven years will appear on a CLUE report. This is helpful if you’re buying real estate, so you can see if the previous owner filed damage claims.
Generally, a CLUE report contains any claims related to storm damage, water damage, flooding, fires, and thefts. You can view all the details of an insurance claim, including the date of loss, the type of loss, and the amount of funds paid out. Additionally, you can see the insurance company’s name, policy, and claim number and whether any claims were denied.
While you still need a professional home inspection, a CLUE report can give you a better sense of any potential issues with the property. In turn, you can make a more educated decision on whether it’s a good investment or a future money pit.
Importance of a CLUE Report in Real Estate
There are several advantages to requesting a CLUE report while buying real estate. After all, it can either give homebuyers peace of mind or warn them about any concerns related to the property.
If you request a CLUE report and see that several claims have been filed within the past seven years, it’s generally a red flag. It may indicate that the property is starting or age or may have underlying issues. For instance, if there are multiple claims for flooding or storm damage, you’ll want to investigate the property for mold and consider flood insurance.
At the same time, multiple break-ins or thefts are also worth looking into. While it could indicate carelessness or lack of security by the current owners, it could also mean that the property is in an undesirable location.
On the other hand, if you request a CLUE report and see that a claim resulted in a significant improvement, like a new roof or siding, then that’s one less thing you may need to fix in the future.
As such, it’s essential to discuss each claim with the owner and have a licensed inspector check out the property before you buy it. Next, let’s go over how to get a CLUE report in real estate.
How to Get a CLUE Report
Only the property owner can request a CLUE report. So, if you’re looking to buy a property, you’ll have to ask the owner for access to that information. CLUE reports can be ordered on the phone or the internet through LexisNexis.
Most home insurance companies report claims to the CLUE database, maintained by LexisNexis. So, whenever a homeowner files a claim to report damages or criminal activity, reports are stored in the CLUE database. However, not all insurance companies contribute claim history information.
If you get a blank CLUE report, it could mean one of two things–the owner didn’t make any insurance claims, or the insurance company didn’t report any claims to LexisNexis. As such, it’s important to remember that a blank report doesn’t mean that no damages occurred. Instead, you’ll want to discuss any past damages or insurance claims with the current owner before buying real estate.
What to Do With a CLUE Report
You might consider requesting a CLUE report for your current home if you’re thinking about buying a new property. Once you get access to your report, it’s crucial to read it carefully. However, what you do with the information is essentially up to you.
If you’re looking at your CLUE report before buying insurance, it could help you determine if there are any inaccuracies. Inaccuracies on your CLUE report, such as incorrectly listed claims, can drastically affect your insurance rates. So, looking at your report before getting insurance can allow you to dispute mistakes and potentially lower your rates.
Another good time to get a CLUE report in real estate is while assessing your own home. If you’re considering selling, showing prospective buyers a CLUE report can give them peace of mind about any previous insurance claims.
Finally, as we discussed previously, requesting a CLUE report is important before buying a home. However, although you can see previous damage claims on your report, that doesn’t mean you can skip out on a home inspection. Here’s why.
Don’t Skip Out on a Proper Inspection
It’s important to remember that a CLUE report is not a home inspection. Although it tells you about past insurance claims for damages, it doesn’t give you enough details about the property to determine potential issues. As such, along with requesting a CLUE report, it’s crucial to hire a licensed inspector to check out the property.
A home inspector will thoroughly examine the entire property to look for potential damage concerns, safety hazards, or maintenance issues. They’ll tell you about any significant structural, electrical, or plumbing problems, so you have a better idea of how much you’ll need to set aside for renovations.
Overall, although a CLUE report is important for buying real estate, it doesn’t take the place of a home inspection–especially when you own rental properties. The rental inspection process is one of the most important steps, as it can inform you of lease violations, property damage, and larger issues.
Keep Your Records Straight with Property Management
Buying and renting real estate requires a lot of research, paperwork, and due diligence. That said, a home inspection and CLUE report in real estate can help you find profitable investment properties and steer you away from a financial burden. In fact, this is a huge part of property management.
Finding tenants, maintaining properties, and keeping records for each rental can quickly become overwhelming for just one landlord. As such, most busy property owners hire a comprehensive property management team to help them with day-to-day tasks.
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Our team of qualified professionals at Bay Property Management Group can manage your properties with ease. Contact BMG today to learn more about our services in Baltimore, Philadelphia, Northern Virginia, and Washington, DC.
