The CLUE Report: Is it Col. Mustard in the Library with the Rope?

I’ll admit, at this point I’m pretty much mystified by the frequently-discussed yet rarely-seen “CLUE Report.” For those of you even more in the dark than me, “CLUE” is an acronym for “Comprehensive Loss Underwriting Exchange.” Basically its a national database maintained cooperatively by insurers to track claims made on particular properties, as well as claims made by particular persons. Before an insurer will write a policy on a particular property, it will check this database to confirm that the risk assumed by the insurer is reasonable. The insurer will not write a policy for a property with an existing and extensive claim history because the property is a “lemon” on which the insurer will lose money.

To date, I have typically counseled my buyer clients to call their insurance agent to obtain a copy of the CLUE report for the property. Lately it seems that my clients are unable to do so. Some insurers (Geico) have indicated that they don’t even know what a CLUE report is, apparently because some insurers are not members of the Exchange (the “E” in CLUE). Some insurers (most recently Allstate) have told the client to purchase the report at LexisNexis, but apparently you can only purchase a report for the home you currently own.

So my question to the RCG community: How do other agents address this issue? Do you invest the time and energy speaking with the buyer’s selected insurer to eventually obtain a CLUE report? Do you not even tell your clients about CLUE reports because they are of little or no value? Something in between? And are any sellers taking the advice of LexisNexis (which of course sells the reports) and obtaining a CLUE report to be given to poential buyers? Thanks in advance for any insight you care to provide.

Ardell, I look forward to your insightful and informative response; David, I look forward to a tangential point that illuminates some as-yet-unappreciated aspect of the Real Estates; Ray, I look forward to more rank bashing of my brokerage business model.

152 thoughts on “The CLUE Report: Is it Col. Mustard in the Library with the Rope?

  1. You must be new to the Real Estate business.

    You need an insurance binder to close a property. Your insurance agent does check to see if there have been claims against the property, as well as flood, or earthquake requirements.

    Many agents leave the insurance detail out of most conversations. They assume that if a property is currently insured it must be insurable. That is not always the case.

    There is also the matter of diclosure by the seller in this State.

    • Yup, I must be. Well, not too new — I’ve probably handled 100 or so transactions to fruition, several more that failed for one reason or another, and lots more that blew up before I was involved. So I guess I’m just still new enough that I’m comfortable seeking input without pretending to know everything…

      Thanks for the input.

  2. I know a guy who is in California now who does about fifty transactions a year, has for eight years, since he started selling Real Estate. There was a year when he did one hundred twenty five transactions.

  3. About six months ago I went through the exercise of asking our current agent at Farmers about a short sale property we were interested in. It had polybutylene piping for which I know many homeowners have made damage claims because of its failure and subsequent water damage.

    The answer was simply my agent can’t find any claims on the property and was unaware of any insurability problems related to the polybutylene piping. Basically a dead end.

    Had I asked about a CLUE report I don’t know if the answer would’ve been any different. But asking specifically about a CLUE report may be a better starting point when inquiring about a property’s insurability than the approach I used previously. Thanks for the heads up.

    • David — thanks for the comment. It seems to me that insurance agents used to provide these; its only within the last few months that my clients have gotten push-back. I agree its a useful starting point in any conversation about the property’s claims history.

  4. Craig,

    1) Loss Run reports have always been b2b, insurance carrier to insurance carrier, and tracked the losses by POLICY, not property or property owner.

    2) C.L.U.E. is a newer b2b service that tracks the propensity of people to make claims. In fact it even included info of an owner calling to ASK if they COULD “maybe” make a claim. It was a personal report, and insurers were checking the personal claim behavior of both the seller of the home AND the buyer of the home. Say a home had NO claims, but the person buying the home had made 2 a year on his previous home. The quote for that person’s insurance to buy that home was higher based on the buyer’s claim behavior, and not necessarily only limited to claims actually made or even only about his house.

    3) Privacy Laws pretty much nixed C.L.U.E. in it’s b2b form from being available to consumers vs business to business, much the same as a person’s credit report. Need to know basis by written permission to the business from the individual being “clued”.

    4) So C.L.U.E. could not run the consumer driven portion of the business, and you started getting spinoffs like LexisNexis geared to consumer requests for THEIR C.L.U.E. report. Privacy Act applies. You can get a C.L.U.E. Report the same way you can get a credit report…only by permission of the person who is being reported on. You can’t get all the neighbor’s C.L.U.E. reports anymore than you can get all the neighbor’s Credit Reports. Same principal applies.

    LexisNexis tried to strip out personal info from the report and make it only about the property and not the person…but that is difficult. Someone can make a claim for their lost or stolen engagement ring on their homeowner’s policy. Then the claim on the homeowner’s policy is about the person and not the property, and they start risking a Privacy Act problem. That is why they are called “LexisNexis Personal Reports” so people understand that this is personal stuff…not public info. They are probably at this point, likely after several lawsuits on privacy issues, only available by the person or with their written permission, the same as a Credit Report.

    So for all intents and purposes, once the Privacy Act pretty much barred all but b2b inquiries, the reports become more about accessing your own…than someone else’s. That did not cause C.L.U.E. to fail as a b2b venture…only as it relates to buyer’s thinking they can get them on the seller of the home.

    Generally speaking, C.L.U.E. Reports have very little to do with buying and selling a home from the standpoint of the buyer accessing that report, but it is still used by the insurance providers for quoting a rate to that buyer, as in the original “loss run” sense. It is an overlay of personal claim behavior added to the physical attributes of the property and past policy (vs property) claims, when it comes to Single Family Home exchanges vs Condo and Townhome management and Master Policies of same. That personal claim behavior overlay may be both the behavior of the seller…and the buyer of the home.

    IF C.L.U.E. were to become part of the process of buying and selling real estate, they would have to be ordered by the seller and given to the buyer as part of the Form 17 Seller Disclosure Form. I wouldn’t hold my breath on that one.

  5. P.S.

    As to your query: “… It seems to me that insurance agents used to provide these…”

    An insurance agent giving the C.L.U.E. report to the buyer is the same as a Lender giving the buyer’s Credit Report to the Seller. Could have happened somewhere, somehow…but never should have.

    Yes…it is part of the transaction. Yes the lender has the buyer’s credit report. Yes the insurance carrier has the C.L.U.E. report. But Privacy Act applies.

  6. CLUE reports were around back when I was in title insurance (over 10 years ago)… in fact I think that’s about when they first came out because they caused a HUGE stink because some home buyers/sellers were discovering that if a property owner even called their insurance agent for a question about possible water damage, and they did not file a claim, it was on the clue report and they were penalized for posing the question.

    I believe back then, buyers could have access to the clue report but, as with many various forms of information, this isn’t the case today. If I were a buyer (or an agent representing one) I would ask the seller to provide it.

    Here’s more info

    • I think that was part of the problem, Rhonda. When owners could not get that verbal info off the report, the Privacy Act kicked in big time. Most would not object to a factual report of claims paid. But when they report a claim AND pay nothing on the claim, the owner feels double injured. When they call to ask if it is covered, and the company says no, and the call becomes a “ding” on their report, it really feels like an invasion of privacy to repeat what was said in a phone call.

      The compromise became that they would not remove those phone call notes, for the benefit of other insurance companies, but they wouldn’t hand the report to just old anybody either.

      Then you had reports that said the owner called asking about mold…and the owner insists they never called.

      It got pretty messy for awhile there.

  7. What we all really want to know is how does one go about determining the insurability and past claims on a property? Preferably early in the purchase process.

    • I’ve never run into a house that had a problem with insurance. There was a time there when knob and tube wiring was a problem, especially with Pemco. But houses are bought every day and insured mostly 100% of the time. Why would you be worried about “insurability”? If there is an owner with a mortgage and insurance now…it’s most likely “insurable”.

      All you have to do is call an insurance agent and give him the address. The big question is does it require flood insurance…you don’t want that to be a surprise. Sometimes you can guess…but other times not, like in Downtown Redmond.

      The odd thing about the Seattle Area is the Lenders handle the Insurance with the client vs the real estate agent. I’ve never seen that anywhere else. Rarely does the subject of insurance come up with the agent vs the lender here. Just common practice.

      • I had a mortgage company, 160 days into a refinance with them, write me a letter stating they were force placing flood insurance on me unless I could prove my property was not in a flood plain.

        After about 16 hours of labor spent over several days, lots of visits to the county records departments, $40 of certified mail sent to the company, 30 dingbats on the phone, I finally had them write me a letter stating they no longer considered the home to be in a flood plain.

        Maybe this was lender specific. But I would sure want to know if property was in a flood plain before I bought, or if it was subject to landslides or some other structural or systemic problem (please don’t make jokes about meteorites here I don’t care about them). These disclosure forms signed when sellers sell are surely not going to say anything because the owner probably doesn’t know, or will claim to not know.

        So we would all like to know what kind of insurability problems we are going to have before we sign our lives away on it. And how do we find out during the P&S contract period?

        • You can call for insurance quotes with just an address. Most agents spot things on site that that can be good or bad…often there is neither, as it relates to a price quote. Flood insurance is usually determined by address and the flood map by the insurance company. Unless you are paying cash, the insurance is part of the process and I doubt you can be forced to buy a property that isn’t insurable. There is a provision for that in a standard contract and it would cause the transaction to fail if there is financing of any kind. The lender will not fund if it doesn’t have insurance at closing.

          At one time one insurer nixed insuring any home built prior to 1917 or anything with knob and tube wiring. The only time I have run into past claims raising a price quote has been in townhome and condo buildings, and that is about the master policy and reflected in the HOA dues vs the purchase and sale agreement.

          All lenders require insurance at closing…a full year paid up policy. So it is not something that slips through the cracks except possibly on a cash transaction. I tend to work…for 21 years…in run of the mill residential property.

          I have run into one case where the property required flood insurance and the owners didn’t know it. They owned the house for 35 years and the flood maps had changed to include their house. They had no mortgage and their insurer didn’t require it of them, only the buyer of the property. But that was in Florida.

          The contract does not protect you from having a high cost of insurance…only if it can’t be insured. It’s pretty easy to get a price quote or three. If there is a problem it may show up in the price of insurance more than whether or not it can be insured at all. The quote will usually tell you why it is high, as they will have access to that information. They may not be able to give you the report…but they can tell you why a quote is high if it is based on something unusual about that given house.

          • Just one more thing for me as a buyer to be aware of. I have a good agent now who would work with me on providing a quote on residential property.

            Ardell, so far I think your suggestion to get a quote from the insurer early on will prove to be the best method so far presented.

          • David S.,

            I happen to know that this will be much more of an issue for you because of the type of property you are intending to buy and the broad geographic area you are covering.

            But know that in the grand scheme of typical housing and everyday residential real estate…it is pretty much a non-issue. That’s where the agent kicks in. They most always know when it will or won’t be an issue, and 95% of the time it isn’t. You are the exception to that “rule”.

            In areas where agents work…they know where the flood zones are, they don’t have to look it up on the map. In areas where agents work…they know where the land is sliding or there are flash floods and can even see the house that will have problems, while the next door neighbor will not. We can even see where a house never, ever had a problem…but will in the near future, based on the materials used at the time of construction that are near their life expectancy. Like a cement underground water drain that lasts 50 to 60 years on a 48 year old house. No past problem…future? whole nuther story. A C.L.U.E. report doesn’t help there.

            If C.L.U.E. reports became the norm at time of sale…people would just cover their own problems more, same as they do not to report small accidents to their car insurer. Anyone contemplating a sale will be careful to keep things off the C.L.U.E. report. So that reporting system as part of the transaction and Form 17 is not the answer, nor will it replace the method we use now. Big problems are fairly apparent…even if fixed…most always. You don’t need to see the most important things on a report, nor is that a 100% or even 60% accurate method of finding it.

          • Actually, Ardell, the Form 22VV does just that, it protects the buyer from being forced to pay an exorbitant amount for insurance, and if that’s the premium required by the property the buyer has the chance to terminate the contract.

          • They didn’t have a 22VV in Florida…but as a wise man once said. “Ardell…in Florida…EVERYTHING’s in a “flood zone”. 🙂

            Not quite accurate…but needing flood insurance in that instance was not really much of a surprise. We would have gotten out on the fact that the seller said “no” to flood insurance on the Seller Disclosure Form, but the buyer’s wanted the house even though it required flood insurance. So all worked out.

            Everyone was happy even!

  8. P.S. I have never seen past claims on an insurance policy in any real estate transaction ever. Not usually part of “the process”. Historically LOTS of people had problems and never made a claim. Most used homeowners insurance in case of fire only. That’s why C.L.U.E. reports started. When people started claiming for all kinds of things…the insurance companies figured out that had more to do with the people than the house.

    Claims on homeowner’s insurance has never really been part of a real estate transaction. It’s not part of “the process” as it exists in any State I’ve worked in…and I’ve worked in 5. CA has a different type of report that has more to do with natural hazards in an area than property specific insurance claims.

    What would you expect to see on there that you need to know about? If the roof leaked…it may have a claim, but also a new roof since then. So why would one care? If it were a needed report…wouldn’t it be part of the process…somewhere…built into the system? A few years back roofers were going door to door after a storm offering to put on new roofs for everyone and get the insurance companies to pay for it. Is was pretty much a scam really.

    The worst houses with the most problems never made any claims…or fixed anything either.

  9. Flood Plain maps are a part of county records. It’s the basis of the requirement for flood insurance. Here in King County the records are available on line. I do agree though that I get stuff from my loan servicer Wells Fargo who want to run one insurance scam or another on me from time to time.

    All together it is the insurance company, or agent, that handles the insurance part of a Real Estate transaction. A Broker introducing a hysteria about insurance would be out of place.

    Ardell has once again brought up all of the key issues, like when Pemco wouldn’t insure knob, and tube. There was a time when fuse boxes weren’t insurable. All of that was industry related rather than individual cases.

    The report referenced here has been a part of law research for a long time, as I recall, it’s a blip on the screen of some water cooler conversation.

    It’s stuff like this that makes me suspicious about the services provided by WaLaw. Is this really a topic of performance by a Brokerage? Should we really be talking insurance which is an insurance industry set of rules, and regulations? I have a ton of insurance policies for every part of my business, but it’s not an area of my expertise by any stretch of my imagination.

    I’m sorry you called me out for this tangent, but you did.

    • David,

      The difference is you and I can walk into a building…or even just pull it up on the mls, and just inherently know the red flags or positives for insurance. It doesn’t happen often, but that instinct just kicks in when needed.

      The WA-Law or Future of Real Estate generally, and I see Redfin and WA-Law and streamlined and automated skillsets as the future of real estate, need better systems for indicating these red flags and pluses. The average agent is not being trained the way we were, nor are they noticing the things we have come to notice over time. They can be in the business 12 years…and still choose to not notice from the buyer side. So Zestimates and C.L.U.E. reports, etc…have to be the technological advances in real estate that streamline the agent service to level down to the skillset of the majority.

      Whether they do that well today…or tomorrow…that is the progression that needs to take place.

      In Seattle single family it is not as easy for that to happen as it is on the Eastside. Not as easy with older or unique housing as it is for newer tract home construction. So there will always be a market for a high level of skill on an “as needed” basis, but that will become a niche market.

      WA-Law is not relative to OS. It’s not even a comparison to Old School. It’s where the industry is headed, in combination with Redfin. They represent what real estate will look like 10 years from now, to some degree. Maybe 50% of the industry. Maybe 70% of the industry. It depends on the quality of traditional agents, and that is going down to meet the level of these services.

      The only “cure” for that…though it won’t happen, is to elevate the skillset of the tradtional agent. If the Brokerages, as run by the attorneys, tell the agents to stick their heads in the sand AND take 3% for doing so…then the services that cost less for less need to take over the market, and rightly so.

      Real Estate is broken…everyone is right about that. The only question is do we take the cost down to that level or actually fix what is broken. No one’s really even trying to do the latter, less for less will be the future of real estate.

      • Ardell, I agree with you regarding Redfin. Since January of this year, I’ve picked up I believe four earnest money disputes, and three of those included Redfin agents. I’m still trying to figure out exactly why Redfin agents would be of lower quality (they seem to be a little cavalier about the terms of the contract), or for that matter whether my anecdotal experience has any statistical meaning or represents meaningful insight.

        I disagree, though, that WaLaw fits that same “streamlined and automated skillset” model. Every WaLaw file will be handled by, and the ultimate responsibility of, a lawyer (even after we grow a little and hire!). A lawyer has the training and skillsets — at least foundationally, requiring perhaps some initial guidance on acting as a broker — necessary to identify these red flags. So WaLaw is NOT an “automated skillset” model. Rather, its entry of a different professional with a different method of compensation that allows us to compete — dramatically so — with the current model.

        Is WaLaw the future? Well, we like to think it has a seat at the table. But obviously there is also a lot of money and energy devoted to reducing the traditional model to the “automated skillset” approach so I doubt if that will fade away.

        • Earnest Money disputes are not very common in my world, so it’s hard for me to imagine how that happens for a legitimate buyer acting in good faith.

          Some models put the buyer within earshot of the seller or agent for the seller too often. The whole original premise of some models is that a listing agent should be willing to show the property or be at the home inspection for the benefit of the seller vs that “service” being performed by the agent for the buyer. The whole “lazy agent won’t show his own listing” syndrome. Or lazy agent worried about who is paying for his time at the home inspection.

          The reality is that the longer the buyer is in the presence of the seller or the agent for the seller, the more likely he is going to spill the beans. The buyer may say something during the showing or at the home inspection that will later come back to bite him in the ass if he needs to cancel for legitimate cause in the legal out time frame.

          Everyone needs a good agent…they just don’t know it until that point in the transaction when they NEED a good agent. If the agent is called in after they spilled the beans…there may be no way to save that Earnest Money.

          Protecting the Earnest Money starts before the offer is written. Buyers who do not seek out a real estate professional until they are ready to make an offer, may have already laid the groundwork for losing their Earnest Money later down the line.

          I don’t think it is necessarily about competency, I think some new models rely on a system where everyone is responsible for their own actions. But buyers do not want to be responsible for their own actions…they want their Earnest Money back…PERIOD!

          No agent in the room always sounds great…until you need an agent in the room. 🙂

          • Interesting comment, Ardell: You open by saying you “can’t imagine” the causes of an earnest money dispute, yet you proceed to do just that for several paragraphs! I think you’re more imaginitive than you believe… 🙂

            I agree that SOME new models are “pay less for less service.” As you have noted, “less for less” is a whole lot better than “same (money) for less (service)”, an all-too-frequent occurrence given the potentially reduced role of the agent thanks to technology (e.g. client can access listings directly).

            I must note, however, that there are also other new models that work on a “less for more” approach.

            On a different note, what are you talking about when you claim that a buyer “may have already laid the groundwork for losing their Earnest Money later down the line” if they fail to retain a professional until they are ready to extend an offer? Honestly, that makes no sense at all. I see no reason how/why this could be an accurate statement.

          • I am involved with a lawsuit now where I have realized the Attorney for the other party has no negotiating skill. He simply ignores the fact his client and I have come to an agrrement with monetary consideration. He is plowing ahead to court even though I have a counter claim.

            Attorneys some times think the law is an absolute. In fact everything is a negotation.

            Your comment here is showing you don’t fully get that concept.

          • Well, “negotiaions” can occur in two contexts:

            If within a transaction where all parties want the same essential result – i.e. a purchase and sale transaction — then you’re right, everything is negotiable and the law has little role in the negotiations.

            If within a dispute, then negotiations must flow from the parties’ legal rights and obligations and the likelihood of a court upholding those rights or enforcing those obligations. The law may not be an absolute, but it surely provides the framework for resolving a dispute using the legal process.

          • You raised an excellent point.

            “Buyers who do not seek out a real estate professional until they are ready to make an offer, may have already laid the groundwork for losing their Earnest Money later down the line.”

            That bears repeating.

    • Is it a good RE agent’s job to make sure the buyer client does a thorough job of due diligence, which includes investigation of the cost of insuring the home? And by implication, some insight onto previous problems for which a claim was made on the policy? Boy, the fact that you think otherwise is a little bizarre. To say, “It’s an insurance issue, it doesn’t involve me” is inappropriate and equivalent to burying your head in the sand and just waiting for the commission check…

      For the record, this is not a tangent and none of your comments fit that description. Moreover, the initial comment itself was inappropriate. I apologize for it. I think I have said this before: My job includes an adversarial component (I maintain an active litigation practice as well as my transactional work as broker/attorney). I am not very good at breathing deeply or otherwise minimizing the feelings generated by my litigation practice. Rather, I typically deal with that stress by being a smart-ass. And its not a good habit. I’m working on it, and forgive those instances in the future when I turn to blogging when I am still way too hot…

      • I didn’t say the insurance binder doesn’t concern me. I have an insurance agent I readily refer people to and have for twenty plus years.

        Insurance is a constantly changing industry. For you as a lawyer to sit down with a client about current insurance policies, and procedures seems wrong to me.

        The fact you brought up the idea that some how a Real Estate agent should be involved in today’s insurance practices seems wrong.

        It makes me suspicious.

  10. “Real Estate is broken…everyone is right about that.

    I disagree. It is NOT broken. Its evolving based on different demands in a changing Capitalistic society. Goods and services must adapt or they are OUT!

    In a Capitalistic Society booms and busts are inevitable. From the Greenspan Put to the Bernanke Straddle home prices will take decades to recover due to corruption and manipulation by Wall Street.

    We are travelling down a road not traveled but one thing for sure is the history books are being written each and every month on how we recover from this debacle and when its all said and done what will emerge is a far more efficient way to transfer,insure, and lend on real estate in the future.

    • Ray said: “When its all said and done what will emerge is a far more efficient way to transfer,insure, and lend on real estate in the future.”

      Haha…such an optimist. I have seen this before Ray, yes there were changes…but…short memories. That’s why history repeats itself…eventually. 🙂

  11. The problem is that it is less for less. We pay WaLaw, redfin, 500 Realty less because of the skill set.

    I’ve been thinking about this a lot since the unpleasantness with another attorney.

    Who would know the difference between some guy with a diploma, and a Real Estate agent? Can the people with the best network be effective in helping a client, or are they looking for customers.

    I really should have never gone to that REBar thing and met those Inman News people. Holy Cow does that change the face of Real Estate? It was a whole day of slimy guys trying to fool the public.

    We are at a point of paying less for no service, no expertise, or no consideration of the profession.

    I don’t see that another obscure assertion is going to help people make a considered financial decision.

    The way to elevate the profession is at the Brokerage. I think Brokerages should be held accountable. If people want to make bad decisions that’s fine, but they should be informed in the process.

    I liked the idea of a client having recourse against a Brokerage. I think a Windermere would think twice before sending out the next barracuda. Desk fee offices should be regulated, and the “agents” brought in from time to time for a field test.

    In my opinion the whole process got lost when we started sending people to Real Estate classes rather than being mentored in the Brokerage. Come to think of it those classes, and the National Association of Realtors created another layer of vendors in that process.

    John Jacobi had a great idea. It’s just gotten lost. Lennox Scott spent a fortune building an online Brokerage, then never, sorry, followed through. The whole thing has gotten muddled in this group think that all any one needs is a computer, and a list of houses.

    It’s like in Glenn Gary Glenn Ross where all anybody needs is the leads sheet.

    Here’s a fact of life; Real Estate is a complex business. You either know it, live it, love it, or fail in the long run. It’s a thirty year process with some get rich quick schemes along the way.

    • I don’t disagree with you, David. But without an office full of experienced agents for new ones to learn from, given they all work from home now…or most of them…whatcha gonna do? I don’t see a resolution. Paying less for less is better than paying more for less. That’s the answer we have, and I don’t see a better resolution that is actually going to happen. I teach all kinds of things to all kinds of people and agents from other companies. There are so many who truly do want to learn. But there just isn’t any place for them to get that education anymore.

      What % of total office agents actually work from inside the office these days? Not many. Usually the new agents come in and the experienced ones stay home or away from them. So you have the blind leading the blind.

      I just had a closing on a listing and the agent for the buyer was…well, pretty sure it was his first sale. I don’t think he had anyone to ask what to do except me. Nice guy. I taught him everything I could during the escrow. He called me his “Real Estate Mama”. But really…is that what the industry is supposed to be like? And that is not the only time I have had to not only DO both sides, but teach the agent from the other company in the process. I’m happy to do it…but…what is the future of real estate?

      Sure, offices teach agents how to fill out paper…but if all they are going to do is open doors and fill out paper…then $4,000 for WA Law is better than 3% for that. Don’t you think?

      • That’s a poor and false dichotomy, because we don’t just “open doors and fill out paper.” Indeed, the fact that you consider drafting and enforcing a contract to best protect your client as “filling out paper” speaks volumes about the difference between an agent — even one as savvy, brilliant, and experienced as you — and a lawyer.

        That’s the WaLaw irony: You pay less for MORE.

    • I had to stop reading when you said this David:

      “I’ve been thinking about this a lot “….That is always the sure sign of entering the mind of David which there is surely no escape.

      But, I did get this far:

      “We pay WaLaw, redfin, 500 Realty less because of the skill set”

      Agreed they are ALL far less skilled then 500 Realty and in addition you can add Windermere, JLS, ReMax, KW, and all the other “typewriter manufacturer” Brokerages who remain in hospice for the next decade.

    • Your argument of “pay less, get less” for Redfin and 500Realty makes sense. But that argument flat out breaks down when applied to WaLaw. Again, a lawyer handles every file. A lawyer (four year college degree, three year juris doctorate degree, passing a stringent multi-day examination) is not simply an agent (HS diploma, 60 hour online course, simple two hour exam).

      I agree that the client makes the decisions, but it is essential that those be informed decisions. That is a guiding principle here at WaLaw. Agents can scream to the contrary until they are blue in the face, but the fact of the matter is that they are motivated to close a transaction. They are sales people (I just had an agent lecture me on the volume she has sold over the last 21 years). That colors, whether consciously or not, the advice and counsel — and information — they give their clients. WaLaw only sells homes when it represents the seller. Otherwise, we don’t sell nothin’. And our advice is better for it.

      • How many Real Estate transactions were you involved in while while getting a four year degree? How about that three years juris doctorate? and that stringent test had to do with insurance binders? Sorry, couldn’t resist.

        Wait a minute, so you represented the seller when you wrote up the property for Tim? Sorry, couldn’t resist.

        In other words you have never represented a buyer?

        Come to think of it, if you only represent sellers, how much of an agent network do you have by claiming to be better than every one else? Sorry, couldn’t resist.

        • Hey, don’t apologize for “not resisting”! I can handle it!

          That said, your comment is absurd. Obviously we put our client’s interests first, so obviously when we represent the buyer we don’t also represent the seller. In fact, as a lawyer such “representation” (in name only given the dual nature) is probhibited. The same is not true for you. And 90% of our work is representing buyers.

          What “agent network” are you talking about? And how does an “agent network” benefit my clients??

          Final thought, Grandpa: by your definition, the only competent agents are the ones who have been “selling real estate” for years and years and years, and education, training, and verified knowledge are irrelevant (in fact, they’re counterproductive, because instead of taking the time to achieve those things I could have been out there selling!). That (a) limits good agents to old agents, which is absurd, and (b) is so grossly oversimplified that its breathtaking.

        • Ahhh, that’s the ticket. Bash away!

          Actually, Ray, please do go on! After all, you’re correct about the first two, kind-of-correct with the third… and then you run out. Because (a) we don’t charge more, we charge less compared to the “traditional” model, and (b) to the extent our model charges “more” for one particular aspect of the services we provide (e.g. $75/hour for tours AFTER THE FIRST 20 HOURS) the total fee is still less, and sometimes, much, much MUCH less than a traditional commission. For example, I have a transaction right now that will close later in the month, and my clients are looking forward to a rebate at closing of $26,774 — i.e. they’re paying nearly $27 GRAND less than a traditional agent.

          As for that third “kind-of-correct” point: Its true only because the selling side of the business (i.e. representing buyers) is so lucrative that it can literally pay for services at a loss on the listing side. Wasn’t this your original model, Ray? Wasn’t there somebody out there who was listing for free for a while, recognizing that it was really a client acquisition service that would pay off when the client bought property? Yes, in THAT context, $3995 is a “high listing fee” because there are people who will list for virtually nothing, certainly not enough to justify the service actually provided or to make a living doing so? Or, alternatively, if they really are a discount flat fee lister — e.g. MLS4Owners — they don’t provide much if any in the way of additional services. We do. Compared to the services we provide, we think our listing fee represents good value.

  12. That is exactly the problem, and why Brokerages need to be held accountable.

    It’s not just experienced agents that work from home. Agents come in with a license then wander off.

    I said three years ago, and have told Craig, that buyers, and sellers should sue Brokerages over agents who didn’t perform, or under performed. There should at least be a panel at the Multiple that is open to the public who want to lodge complaints.

    We have a self regulated system that should be able to regulate itself. It is self contained, and a little protective, if not defensive.

    Let’s use the people who have sued Windermere repeatedly over the rat problem they claim they had in a house, I should say the dead rat problem. Those people may be nuts, but they are standing in front of the Windermere office on Sand Point, they have a web site, and Demco just keeps defending, or attacking them.

    Maybe a Multiple panel would be busy all the time with frivolous complaints, but it would be a forum for all Brokerages.

    There are bad agents, as well as good, but it is the lack of concern about the profession that bothers me the most. It’s like parents who expect schools to teach kids social behavior, or how to get along in the world.

    Brokerages need to be held accountable.

    • I have sued brokerages and won, so I know they can be held accountable. But I agree, the system of oversight is pretty weak and the profession hardly self-regulates (what happens when a REALTOR violates the NAR code?).

      Those Windermere clients? They called me to “alert” me to what was going on. I asked if she was soliciting pro bono legal services, and she said “of course not!” But when I asked her what she wanted from me once I was alert to what was happening, she hung up…

  13. It’s this simple. Real Estate is a small community. It’s nice for the Board of Realtors to claim they lobby Congress, but deals are done within a twenty five mile radius of an agents home. Beyond that and it’s just all guessing.

    You are a perfect example, along with Ray, and redfin. You came into our house and started trashing every body. This post is just another example.

    It’s mass hysteria designed to show you have found obscure knowledge. It’s a blip on the screen. Now you have another thirty comments to point to.

    This is how the internet works. It’s content, and controversy.

    • “Your” house?? What, the real estate brokerage system? Your sense of entitlement is astounding. Wake up and smell the coffee: Any industry immune from change is a system that will wither and die. And your comment of “our house” just tells me that the DOJ needs to redouble its efforts to promote competition in real estate.

  14. Real Estate is a way of life. Many new agents are good at it, right off the bat. A lot of agents who have “been in the business forever” suck at it.

    I’m just saying that a post like this indicates you are looking for controversy.

    Let me say it again, Real Estate is a small community. You can throw out all the information in the world on the internet, but some one would have to be interested enough to digest it.

    A person also needs to be broad enough in scope to see the bigger picture of the market place. It’s a point of interest, it takes time, if not a passion, for the industry. You spent a bunch of time learning about the law. I don’t see how that qualifies you for representing people in a Real Estate transaction.

    Washington State is a boiler plate form State. Once you deviate from that boiler plate, yes, attorneys have to be involved, so for short sales, great, you have a niche. Repeatedly claiming you are better than agents because you spent time studying the law isn’t true.

    Yes, where is your network of agents? A lot of new agents start by carving out a territory. Real Estate is a long process, a long career. It’s like any business, it takes time to get established.

    Over the course of time you might realize that those same people you go head to head with today may have a buyer for your listing next year. It’s better to be nice.

    • David — so many things to say in response!

      1) A “post like this” and I’m looking for controversy?? Note that the post was about the CLUE report, the results of a property-specific search of an insurance-claims-based statistical database, and its value to a buyer and how a buyer might obtain it. THAT’S “controversial”? Whoa. I dare you to find one other person willing to claim this post was controversial.

      Now the comments — yep, I’ve been my fiery self. But you and Ardell raised WaLaw as a topic in the comments, not me. It’s part of my new social media policy: Less blogging about me and WaLaw, more blogging about neutral topics of value to consumers. (That’s the irony in you calling it controversial!) But I’ll be darned if I let others talk about WaLaw — inaccurately, no less — without responding.

      2) A law license quallifies me to represent individuals in real estate transactions, period, beyond dispute. Now, I will concede that it is not the ONLY thing that might qualify someone to act in that capacity. I’ll even concede that it might not be the BEST thing that would qualify someone in this regard. The law itself allows a person to practice real estate based on a variety of qualifications, such as licensed agent, lawyer, principal in the transaction, etc. But to assert that you “don’t see how” a law license qualifies me at all… That’s just bizarre.

      3) Washington is a “boiler plate state” due to the custom and practice — and growth — of the NWMLS. But those forms have been drafted and approved by attorneys, as required by the law (Cultum v Heritage House). Use of those forms IS the “practice of law.” Agents may practice law to the limited extent of completing blanks in those pre-printed forms. As an attorney, I have no such restriction on my practice. So yes, I am better than other agents in regards to the legal services they provide.

      4) Did you catch the Redfin promo– er, newspiece in today’s Seattle Times? And did you see the quote from your good friend Glenn Kelman?

      “Part of being an effective customer
      advocate is being able to work with
      all the other real-estate agents in
      town,” says Kelman.

      I absolutely don’t want to alienate anyone such that it prejudices one of my future client’s ability to buy or sell a home. I get it. And I’m working on my practice style accordingly.

      And I certainly don’t want to alienate anyone who hasn’t even MET me outside of this blog if it will prejudice my client, either. That is not my intent.

      David, to be clear: I respect real estate agents and the services they provide. There are lots of very good ones out there who do fantastic work. Agents who are passionate about their job, and who spend years cultivating their knowledge and practice, make excellent agents. I hope that I’ll be able to join that passionate — and experienced — group (frankly, I think I’m there, but I can appreciate your point that it takes years….).

  15. “Over the course of time you might realize that those same people you go head to head with today may have a buyer for your listing next year. It’s better to be nice.”

    David you must be kidding?!! Being nice SHOULD have nothing to do with a Pre Approved Buyer coming down the pike that wants to buy a listing of his. I would show my clients a listing any day of the week irregardless if I disliked or the loved the listing Agent. The listing Agent is meaningless to me other then I hope they answer their phone and that they did their due diligence when they took the listing!

  16. Hi Craig,
    In the 5 years I have been an agent I have only heard of a CLUE report mentioned twice. Not at anytime has it been mentioned in a transaction. I think it is a great idea. I also liked the suggestion that it be provided by the seller. Although I can see it being an issue if your are dealing with a foreclosure or a court ordered sale.

    Thanks for the info.

    • Thanks for the comment! As noted by the post and the handful of comments relating to it, though, I’m not sure you’ll have much success in getting it. I have changed my practice in handling this issue. I now tell my clients to seek a binder of insurance with annual premium no more than .5% of the sale price — i.e. the very contractual rights specifically conferred by a local form, 22VV, the Homeowners Insurance Contingency — and to not even bring up the CLUE report. It causes way too much confusion.

    • This is officially too far afield from the post, and I don’t have any “social media” time in my calendar, so no response from me here. Perhaps a future post…

  17. David Losh is 100% correct when he says: “You came into our house and started trashing every body. This post is just another example. It’s mass hysteria designed to show you have found obscure knowledge. It’s a blip on the screen. Now you have another thirty comments to point to. This is how the internet works. It’s content, and controversy.”

    BUT the traditional model opened the door for that to happen when they became landlords of agents making money on desk fees vs Supervising Designated Brokerages.

    This post is an excellent example. In the grand scheme of buying a $500,000 home and the system in place, homeowner’s insurance and the cost thereof is NOT a big part of the system, and rightly so. It’s minutiae. You come along and make a big deal out of nothing for controversy sake as if all of the agents for 100 years missed something that you in your brilliance figured out is vitally important. Well…it isn’t, and there’s good reason why we don’t move this issue to “front and center” in a real estate transaction. But do you ask why we don’t, as a newcomer? No. You act as if for 100 years everyone was being negligent, when that is clearly not the case.

    But it serves your purpose to act as if somehow…the entire industry screwed up on this, and you figured out something no one ever bothered to think about. Hahahaha!

    But…it’s controversial and interesting and makes a big noise. 🙂

  18. WTF? I author a post about an issue of general interest to buyers and brokers — see the comments from David S and Eugene RE above. In response, I am accused of “generating controversy” and disrespecting brokers.

    Look, I’ve been guilty of that in the past, I admit. But you guys — you and David Losh — are out of line here. This post was a genuine attempt to raise an issue of general interest and to gain some personal insight from the comments. If I can’t do that here in this forum without being accused of “flaming” or “trolling” or generally represensible behavior… Well, this isn’t the forum it used to be. Its become a broker echo-chamber of sorts, open only to those of a similar mindset.

    And frankly that just confirms my fears about RCG. It used to be a vibrant community, but now its the Ardell-n-David show, with guest appearances by Ray (the funny guy) and Kary (the villian! hissss).

  19. You put up a post about the CLUE report. Come on, how do agents deal with it? You are advising your clients to get one? Geico doesn’t know what it is? Come on.

    Insurance companies issue binders. It’s a part of the loan process. You ask for the binder when shopping for a loan.

    I’m sorry you weren’t taken seriously.

    The fact is there are good agents who are losing market share to smoke, and mirrors. Glenn Kelman is my favorite target. Redfin brings absolutely nothing to the table but a pretty web site. You are also right up there. You have an extremely expensive Brokerage that brings even less to the table than redfin.

    I like Ray because he is honest about what he does for $500. $500 is the going rate for filling out paper work. He is probably much more expensive, but I’ve never looked.

    • You guys are crazy! I have an “extremely expensive” brokerage? That is patently untrue…

      Here’s my last word, demonstrating just how “controversial” I am being in having the audacity to discuss CLUE reports:
      Google it!
      As you can see, its a really, REALLY controversial topic…

  20. The issue Craig, is the “more” of real estate services is knowing a LOT about houses..not the paper that gets you into that house. Getting a C.L.U.E. Report is not the means to that end, nor is expecting the seller to tell you everything that is problematic about that house. The Inspection “Report” is also not the means to that end.

    Being a valued representative of buyer clients involves more and more knowledge about houses, their values…why this block values differently than the block over, why this house will flood…and the neighbor’s house won’t. There is no shortcut to that knowledge…via a C.L.U.E. Report or a Seller Disclosure Form.

    Insurance quotes for homes…involves a whole lot more than the house. It’s generally inappropriate for a real estate agent to treat the cost of insurance as part of their research for a few valid reasons. The lender is the insured who knows the minimum that THEY require and the language needed in that policy required by the lender for the home to close escrow. Beyond that, home insurance needs to be elevated beyond the needs of the house itself, to the protections needed for that particular buyer. Some need a fine arts rider for expensive collections in their home. Some need an above average jewelry rider for large amounts of expensive jewelry that will be housed in their home. Some have an expensive collector vehicle. Home insurance is a personal protection…not merely a “house” protection.

    It will never be appropriate for a real estate representative of a buyer to ask them “how much expensive jewelry do you have?” In fact…it would be pretty darned creepy, yet those are the things that determine cost of insurance and alter the quote from one home buyer to the next.

    So why have you been recommending that people get a C.L.U.E. Report is the question? Why are you sticking your nose in their personal business of jewelry riders or special collections riders or people’s propensity to make claims on their home owner’s insurance and for what? Is the buyer really “entitled” to know that the seller had a 2 carat diamond ring lost or stolen and claimed that on their homeowner’s policy?

    The smoke and mirrors that David is talking about is moving a topic to the wrong place to compensate for the fact that someone does not know enough about homes to rely on the actual method of providing that needed representation. That is the less for less. Your basis of more is about paper vs houses…the reality is that houses are more important than paper.

    Ray thinks “full service” real estate is about “finding” houses, and consequently believes RE commissions are too much for “finding” houses. You think “full service” real estate is about the contract and writing it well and understanding it, and so you deem that RE commissions are too much because a lawyer knows that paper better than an agent.

    The reality is neither of you will agree that what you provide is less for less. You think Ray is giving less for less and he thinks you are giving less for less. But that is because neither of you know what “full” is.

    The disagreements that fly around RCG are about different and erroneous definitions of what “full” service is…

    True…many full service brokerages know what “full service” is for a seller, but not what “full service” is for a buyer. More accurately they “know” what it is, but don’t want to provide it, as full often leads to a buyer not buying the house…and that’s where the conflict dilutes the representation. BUT that does not mean that you and Ray offer full services…because full is about houses…not finding them…and not the paperwork that gets you into it.

    In the grand scheme of a buyer getting from square one to into the house…the paper of that process is the least of it…not the be all end all of it. Looking for more paper…via a C.L.U.E. report, is not the answer to anything about the house…it’s just more paper.

  21. Its an NWMLS form, Ardell, hardly “beyond the realm” of a broker. And the CLUE report? Its written information ABOUT THE CONDITION OF THE HOUSE!

    Honestly, I think you guys are off the rails on this one…

    • I know you do Craig, but why would you think something almost no one does was just “missed”? Why would you not assume if no one does it…there must be good reason why not, and seek out that knowledge of what method is best vs that one?

      That is the respect for the industry that David is talking about. If no one does it…maybe there is a really, really good reason why no one does it.

      There are tons of forms no one uses…and it’s not because we don’t know they are there. There are also negotiating reasons why we don’t use as many and more as possible.

      Give the industry a little credit and ask if not, why not? Sometimes having the best and most buyer protective contract leads to only being able to get the worst houses. Look at the big picture on that.

      Do you also always use a “neighborhood review” clause? Sure…it’s there…sounds good…but…many reasons why using one will lead a buyer to buying the worst house on market as a result.

      • Well, that’s funny because I thought I DID ask “Why not?” Oh, wait, I really did:

        How do other agents address this
        issue? Do you invest the time and
        energy speaking with the buyer’s
        selected insurer to eventually obtain
        a CLUE report? Do you not even tell
        your clients about CLUE reports
        because they are of little or no
        value? Something in between?

        And yet you guys still jumped all over my a**. Honestly, David and Ardell, please let me actually say something “controversial” next time before you attack me. We don’t need to increase the intolerance of the RCG community — indeed just the opposite. Ask yourself: Why don’t people comment here as much anymore?

  22. You are an extremely expensive Brokerage. The going rate for an attorney to write up a Purchase, and Sale agreement has been about $600 for a very long time.

    Where it gets expensive is that once an attoreny puts pen to paper, another attorney is required for “contract review.” That can be another three or four hours of attorney billing, before that contract goes back for “further review.”

    The buyer, and seller are in limbo while that goes on.

    You called us out. You got a response. You made the comments, you got a response.

    • Well, David, at most that makes me an extremely expensive LAW FIRM, not a brokerage. My brokerage is quite inexpensive compared to all others. We’re not always the cheapest, but we’re never too far off, either. Have I mentioned that we’ve rebated OVER EIGHT HUNDRED THOUSAND DOLLARS to our buyer clients? Yeah, you can call us a lot, but “expensive” ain’t one of them.

      Even if you think we’re expensive AS LAWYERS, our flat fee covers way more than just “writing up” a purchase and sale agreement. If you compare the services included in our legal flat fee of $1495 to any other attorney in town, you’ll find that we match up pretty well. So I think you’re still wrong, but at least you’ve got something to talk about when you complain about my fee as a LAWYER.

      I “called you out” tongue-in-cheek as a nod to the reality that RCG is devolving into the “Ardell & David Show” with a regular cast of “drop by” characters. Sort of like Mr. Rodgers, except you’re a whole lot meaner and spend all your time discussing real estate, rather than vowels and numbers and the like. I didn’t mean to offend. Well, not originally, but given the unfair treatment I’ve received since…

      • We’re not attacking “you”, Craig. We’re attacking the idea that knowing everything you need to know about a house is as easy as ordering a C.L.U.E. Report. Isn’t that the subject of this post?

        • Gosh, Ardell, did you read it? Apparently not if you think the subject is “knowing everything you need to know about a house is as easy as ordering a C.L.U.E. Report.” Give me a break!!

          Look, you guys got on me unfairly. Goodness knows, I’ve stepped on toes and offended in the blogosphere, but I recognize, apologize for, and learn from my mistakes. You and David apparently shoot from the hip and don’t really care who or what you hit. It demeans blogging in general and RCG in particular.

          I had this crazy fantasy thaty you would extend me the courtesy of last word — that’s about as close as you come to admitting your mistake. Oh well. Go ahead and make a final crazy, outrageous statement about my post and my practice to finish this thread up…

          • Craig,

            There are only two ways to look at this post:

            1) Oh no! Something we NEED is no longer available!

            2) Something we never needed is no longer available. Good Riddance. It gave a false sense of knowing something and was an invasion of the seller’s privacy.

            You are taking this too personal. The reason it is no longer available is because a buyer should not have been accessing it in the first place. That is not about you, Craig, except to the extent that you may have told people it was important for them to have it.

  23. Oh, alright, since we hurt your feelings, I’ll shoulder that blame.

    Some of those Real Estate agents you keep bashing are losing market share to guys like you.

    Guys like you include the Glenn Kelman guy who thought Real Estate would be an easy way to make a buck. You guys think all you have to do is tweak it a little bit, lower margins, stream line the process, and it’s a money maker. It doesn’t work that way. Real Estate is a brutal, hard work way to make a living.

    You have to love the business. You have to love it. It’s a deep rooted emotional tie that keeps people coming back year after year, good years, and bad. It’s an addiction. You can’t leave it alone.

    I don’t sell anything, and still look at houses. I was in three today. I consult, for free, on about 25 projects a year, for buyers, sellers, Real Estate agents, and investors. I refer people to agents, and have referred people to you, for free.

    Real Estate is a way of life. It’s big hair, and Cadillacs. If you’re riding a bike, Glenn, get out of the business. You can’t put buyers on a bike. If you aren’t working with buyers, then what are you doing in the business? If you aren’t driving people to lunch, what good are you?

    You just stepped in it. Maybe it was the wrong place at the wrong time.

    Really, do love the business? Can you not do business? Is it an addiction for you? Would you be in this business if you were doing it for free?

  24. Do you love the business? That’s the question.

    Like I said this may be the wrong place, wrong time, but ultimately all the people who tell me real estate is broken seem to be the people who represent the problem.

    People started entering Real Estate in droves like it was a good money maker. It’s not. Real Estate is a way of life.

    • “all the people who tell me real estate is broken seem to be the people who represent the problem. ”

      Didn’t Ardell just tell us all real estate is broken?

      “Real Estate is a way of life.”

      Not sure what you mean by this but just warn me as I enter the mind of David…Its cautious treading!

      enough with the pending moderation….good god.

      • Yes Ray…I am part of the problem. I do think the majority of real estate agents do not understand how to represent a buyer well vs “sell something to them”. I think real estate IS broken to that extent. That leaves those trying to represent buyers better and best grasping at straws like C.L.U.E. Reports, because there is no clear and best model of representing a buyer best and well for them to emulate.

      • It’s really simple Ray.

        You’re a nurse. Why? Is that what you do to make the money to feed your Real Estate habit?

        Where you in the military?
        Once you enter the military it’s something you do for years. It’s a commitment. You train with your fellow soldiers. You either form camaraderie or not, but those that don’t may not last.

        Just trying to relate here.

        Because I don’t see where you bring any information to the table. You self promote.

        You’re a nice guy, and I like you, I like what you say.

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