What is a CLUE Report and why should you care? Whether you’re buying or selling you NEED to know.
Hey everyone, welcome back! I’m Lindsay, with the Wise Move AZ Team at Realty ONE Group. If you want to stay up to date on all things Anthem and Real Estate then you need to subscribe to our YouTube Channel. Pro Tip: You’re also going to want to hit that little bell icon while you’re there, so that you’re the first to know when our new videos are posted every single Thursday!
As your Anthem, Arizona REALTOR® I love working with home buyers and sellers as they navigate this exciting time… and guess what! One important part of the transaction is the CLUE Report.
Oh and before I forget, at the end of this post I’ll also give you access to a sample purchase contract so that you’re an expert when it comes to buying or selling your Arizona home. So, stick around!
So first things first, what the heck does CLUE stand for?
CLUE stands for Comprehensive Loss & Underwriting Exchange.
Oh! Well, that clears things up… NOT!
What does that mean?
Long story short, the CLUE Report is an insurance claims history. Per the Residential Resale Real Estate Purchase Contract in Arizona this is what needs to happen:
“The Seller shall deliver to the Buyer a written five year insurance claims history regarding the Premises (or a claims history for the length of time the Seller has owned the Premises if less than five years), from the Seller’s insurance company or an insurance support organization or consumer reporting, or if unavailable from these sources, from the Seller, within five days after contract acceptance.”
Well, that’s pretty boring but it’s important.
What does this mean for Sellers?
Sellers, as soon as you go under contract you need to reach out to your insurance provider and request a five year claims history. They are used to these kinds of requests and can usually get it over to you within a day or two. Once you receive it, send it over to your REALTOR® and they will take care of delivering it to the Buyer’s agent.
If you know the CLUE Report is going to show a loss or a claim, I encourage you to tell your listing agent early in the process. This way they can discuss it in advance with any serious buyers and can tell you if they think it will impact the sale. Just keep in mind you only have 5 days after contract acceptance to get this into the hands of the buyer.
What does this mean for Buyers?
Buyers your job is pretty easy. Once you receive the CLUE Report you need to read it. I know there is a ton of paperwork flying around, but take a moment to read this document. It isn’t long and it’s worth your time, I promise. Most of the time you won’t see any claims. If that’s the case you can just move on.
If the report does happen to show a claim, you may need to do a little more digging. If anything is unclear ask your REALTOR®, they will be able to request additional information from the Listing Agent. Keep in mind, if you aren’t able to get answers to your questions or if the claims make you too uncomfortable you are not required to proceed with the contract. You can cancel, but you must do this within 5 days after receipt, so watch your time.
Additionally, if there is a claim, you are going to want to get quotes on insurance within this five day period. It is possible that a previous claim could result in a higher insurance premium. Just do your research and you’ll be in great shape to make an informed decision.
Why is the CLUE Report so important?
Well, it’s important because it’s required by the contract. But more importantly it helps to fulfill the requirement for the Seller to disclose all known material facts about the home. A previous insurance claim could impact a buyers desire to close, so it is definitely important.
That being said, I don’t want you to panic. We’ve seen our share of CLUE reports that show a loss; including significant flooding in a kitchen, and guess what, it still didn’t crater the deal. People are reasonable and they understand that homes aren’t perfect, but they deserve to know.
Did you know that the CLUE Report is just one small piece of the purchase contract? There are so many moving parts, that it’s a good idea to do as much research as you can before going under contract. Part of your research should include reading a sample purchase contract. This will give you an idea of what the Buyer and Seller’s obligations and rights are under the contract.
Sounds pretty important, right?
If you’re ready to get a jump start on this research then you’ll want to click here to download your copy. If you have questions as you’re reading through you can always reach out to me (Team@WiseMoveAZ.com).
So, there you have it! Do you feel a little more prepared to tackle the home buying and selling process?
See YOU, next Thursday!