Really you shouldn’t be clueless when buying a house, but I’m talking about C.L.U.E less in this particular instance.

You will sometimes see a potential buyer ask a seller for a copy of their CLUE report. CLUE is the Comprehensive Loss Underwriting Exchange. This in an insurance industry database which tracks claims made by homeowners. All in one itty bitty space. CLUE was designed to help insurance companies avoid fraud and identify people that make excessive claims.

One of the side benefits is that it keeps all of the claims made on a particular house. How does this impact you as a buyer?

Let’s see you want to purchase a house. The sellers disclosed to you that the water heater tank broke and flooded the basement. They tell you the insurance company paid for the repairs and they were completed. You can have the seller order a copy of the CLUE report and it will tell you if indeed this is true. It is a good resource for buyer due diligence.

The other issue that buyer’s may have is with water damage. Let’s say that the seller’s have a house that sits below grade and is susceptible to flooding. The house flooded and the sellers filed a claim with their homeowners insurance, but the claim was denied. The claim gets reported on the CLUE report. You as a buyer, try to get a policy issued, and the insurance company sees this claim for the house. They may decide that the house is too risky and require a higher rate. Suddenly you are paying more per month for your house. That would be nice to know early in the transaction, rather than right before the close of escrow.

So…unless the house is new construction, you may want to consider asking the seller to pull the CLUE report for their house. It’s $15-$20 and can be done online. With the report being so inexpensive, it really doesn’t make sense to be CLUEless on a home purchase anymore.

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