A few hours of due diligence can save you hundreds hours of hardwork in the future.
This image of water damage in the wall of a home isn’t pretty. Of course, a couple of carpenters and some drying time can make it look as good as new. In fact, it will look so normal that your due diligence and inspection of the home will not see a thing to give you a clue as to this previous damage, no matter how extensive it was.
It’s true that this may not be a matter for great concern, IF repairs were done properly and the area was totally dried out. If not, could there be a growing mold problem that can be a major issue in the future. In fact, few insurers will cover toxic mold remediation in a normal policy anymore. It’s extremely expensive, and may not be effective, resulting in abandonment of the home.
If you don’t have a clue by a normal inspection of the home that there was extensive past water damage, what do you do? You get a C.L.U.E. This is a Comprehensive Loss Underwriting Exchange report for the home. This exchange is where insurers share information about claims made and paid on properties. You will find out about water damage claims and the amount paid for correction. You won’t get details about where in the home the damage was, but you will know it happened.
Water damage can cost you time and money. It’s a mistake you don’t want to have to pay for
A home’s CLUE loss history report provides insurance company names and policy numbers and any claim numbers. The report lists the dates of any claims, the loss types and amounts paid for losses, and it will tell if a claim was denied.
Weather-related losses, fires, theft, vandalism and water damage are some of the types of claims listed.
Only the homeowner can request this free report at LexisNexis.com’s personal report site area. However, in your purchase agreement, or before an offer, you can ask them to get it for you via an online request. A recent survey showed that more than 80% of homeowners were unaware of this exchange or the report. Many real estate agents never mention it when listing a home either, as it can only cause trouble if there is negative information there.
What the rental property investor, or other investors flipping to that buyer, should have for a concern is whether insurance can even be purchased. Worse, maybe it can, but you find that it will be much more expensive than expected due to the home’s claim history.
This is a report for the past seven years, so you can’t go back to the construction of the home. It also could be blank, even if there was damage to the home. If the homeowner didn’t make a claim, perhaps to avoid having it on a report, there will be no record. There are also some insurers who do not participate, though the major companies all are members of this exchange.
Though some homeowners may resist, that could be an indicator of a possible problem. After all, it’s free for them to get one, so why not? Before you buy that next rental home, get a C.L.U.E.
To read more, check out yanceyco.com