Attention Realtors, real estate attorneys, and all homebuyers! There’s a new industry tool available that might just add another wrinkle to delay your closing!
Equifax Credit has partnered with a company called BuildFax, which collects and organizes construction records on millions of properties from cities and counties across the United States. They are selling themselves as a “one-stop shop for building, remodeling, and repair information on over 60% of U.S. properties.” They claim to have data on building permits, certificates of occupancy, and certificates of completion on new construction, major systems repair, additions, renovations, roofs, pools, demolitions, contractors, and more.
BuildFax has made their reports available to casualty insurance providers (homeowner’s insurance companies) so they may “improve underwriting valuation models and reduce potential fraud.” These reports will allow homeowners insurance companies to check the existence (or absence) of CO’s and building permits on properties and compare them to the appraisal (which they often request from the homebuyer) before a policy is issued.
This could potentially put homeowner’s insurance companies in a position to add conditions to the closing of a real estate transaction!
Consider the following example:
You’re buying a home with a deck, an outdoor Jacuzzi, or maybe the house has some skylights. None of the improvements have CO’s and no one within the transaction is making an issue of it. A week before the closing, you call your homeowner’s insurance company to obtain a policy (which usually only takes a day or two). Their BuildFax report points out the missing CO’s and your insurance company demands the CO’s be obtained prior to issuing a policy.
Think this could delay your closing? You better believe it.
On the positive side, these reports are also available to listing Realtors and will make it much easier for a listing agent to check for these potential legal issues prior to taking the listing.
As always, an ounce of prevention is still worth a pound of cure. Ask the right questions at the beginning of the transaction. Don’t wait for the title report or a BuildFax report to point out CO problems. The earlier these potential issues are uncovered, the sooner options can be discussed to ensure a smooth and timely closing.
(Inspired by The TBWS Daily Show, 6/07/11.)
Warren Goldberg is a Mortgage Planner, and published author. His interviews include Blog-Talk Radio, Newsday, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.