You know your credit affects everything, right? Did you know that your house (and the one you’re trying to buy) has a credit report? You know there’s a database for everything, right?
Several years ago a real estate agent I know had a buyer who was closing on a home purchase in a couple days. He called his insurance company a few days prior to closing and said he needed insurance. But.The combination of his credit (not 800+ credit score) and the house’s credit resulted in his insurance policy costing many, many times what he was expecting (and budgeting for). He no longer qualified to buy the house and everyone found out a few days prior to closing.
Did you know that the Clue Report goes back five years into the history of a property. It is standard industry practice to purge losses over five years old“?
So: when the power went out for a week in last year’s derecho and the seller of the home you’re trying to buy filed a homeowner’s insurance claim for the $400 worth of groceries they’d just bought? That could affect the buyer’s ability to get affordable homeowners insurance.
In other words:
“Only information about property loss claims made against homeowner’s or automobile policies is included in the CLUE database. Information from the CLUE database plus your risk score make up the complete insurance risk profile. However, your credit history can play an important part in an insurance company’s judgment about your risk potential.”
When I’m putting together offers to Purchase when representing clients, I use an addendum (that has been a part of the standard Virginia Association of Realtors’ forms since at least February 2005) called the “Homeowners’ Insurance Addendum” (simple, right?). The most difficult part of this form is that
most many Realtors in Charlottesville seem to have never seen this form – and many see it as an unnecessary, superfluous contingency . I don’t know why.
The form addendum is clear – it forces the buyer to ascertain within a short time period (similar to that of the home inspection contingency) that they can get affordable homeowners’ insurance – with a certain cap on the annual premium and the deductible.
Better to find out in the first two weeks if the homeowners insurance will be $4,000 per year instead of $700, right?