[karabearblu]

Hi. I am new here and new to home ownership. My husband and I are in the process of buying our first home but we are wondering if our inspection report poses a deal breaker. The majority of the house is run off of knob and tube wiring and a 60 amp fuse box. In order for us to even get a loan, the fuse box has to be updated to 100 amps (which the seller has agreed to take care of). The kitchen is remodeled, so all major appliances run off a newer box, but I am curious as to how knob and tube works with a 100 amp box and whether this should be a huge concern right away. I am starting to think it may be a deal breaker for me unless the seller agrees to upgrade the wiring. It is a very expensive process and we already have one expensive fix (the central air unit needs replaced). Of course with the knob and tube comes no GFI outlets so all of those would need replaced also. The rest of the house is great. 1 year old roof, 2 year old heater and water heater, remodeled kitchen, original wood floors, nice sized yard, two story play house built just last year that would be PERFECT for my kids. I am just worried about this major electrical issue, home insurance concerns, etc.

 

[AllanJ]

Knob and tube works perfectly well with a 15 ampere breaker for each branch circuit in your new panel. If there is an older fuse box, a single Romex cable up to the size of the old feed for that fuse box can be run from there to the new panel, with a breaker or breaker pair in the new panel that matched the cable size, for example 50 amps for #6 wire.

It is best to bring loose individual K&T circuits into a junction box and use modern cable (Romex, etc.) for the final run into the new panel. If you combine two branch circuits at a junction box with a single cable to the panel, the breaker has to be sized for the smaller of the two (e.g. just 15 amps.)

Ground fault interrupters, either as GFCI breakers or GFCI receptacles, can be used with K&T. For the GFCI receptacles the outlet box has to be big enough, usually more than 3 inches deep while older metal boxes are usually smaller.

Some insurance companies wil not do a policy if there is K&T wiring. Contact insurance companies in advance of closing. If you can't find an insurance company the bank will provide the insurance at a greatly increased cost, like 3 times the cost of normal insurance policies. It is not farfetched to get a price reduction that reflects the increased cost of insurance for a year or two if you are able and willing and allowed to do the wiring yourself.

The sales agreement should have a financing contingency such that if the mortgage does not go through even as late as closing day then the deal is off, including if unavailability of insurance at acceptable cost is the reason. You the buyer should not do work on the house prior to closing day.

 

[karabearblu]

The insurance factor is what I fear most and the cost of replacing it of course.

Knob and tube works perfectly well with a 15 ampere breaker for each branch circuit in your new panel.

It is best to bring the K&T into a junction box and use modern cable (Romex, etc.) for the final run into the panel.

Ground fault interrupters, either as GFCI breakers or GFCI receptacles, can be used with K&T. For the GFCI receptacles the outlet box has to be big enough, usually more than 3 inches deep while older metal boxes are usually smaller.

Some insurance companies wil not do a policy if there is K&T wiring. Contact insurance companies in advance of closing. If you can't find an insurance company the bank will provide the insurance at a greatly increased cost, like 3 times the cost of normal insurance policies.

 

[LooseSCruz]

Beginning this year, every insurance company in my area has adopted a policy of requiring removal of all K&T wiring as a prerequisite to getting any homeowners insurance. At least that is what I've heard from a few of the regulars at our shop. Best to check with your insurance company.

 

[J. V.]

Get three quotes for upgrading the knob & tube and the panel. How do you know 100 amp is the right size for this house? If you have electric appliances and are going to make this your home for awhile, you might want to consider a bigger service. Always make room for future expansion. Hot tub? On demand water heater? Outbuilding? Down the road you might realize the 100 amp panel was a mistake. So think about this now. Maybe you can work a deal where the HO pays half of the COMPLETE upgrade? I would see about this before I did anything. I would NEVER upgrade to 100 amp. I would go 200 if I was going to do it at all. I am not saying you need 200 amp. I am saying you might in the future. So look at this now! 200 amp is the standard upgrade for most homes.
One more thing. Is your house all gas or electric or a combination?

 

[itsnotrequired]

i'm suspecting the 100A is the minimum panel size dictated by the insurance company? +1 to what jv said. any competent electrician can perform the service sizing calcs to determine the actual requirements. and keep future expansion in mind. demand load may come out to, say, 99 amps, such that a 100 amp panel would suffice but the minute you increase the oven size, add an addition, etc., the panel is now undersized.

 

[karabearblu]

It wouldn't be a problem to upgrade to 200 down the line, but I am starting to think the knob and tube might be a deal breaker. I will get some quotes. The inspector does electrical work and gave us an "estimate" and is supposed to be typing up a quote for us. No outbuildings or hot tubs. Just your general appliances. The kitchen was completely redone and runs off of a different breaker box. The only things we would be running through the knob and tube would be a couple window unit air conditioners, lights, computers and televisions. The dryer, range, heater and water heater are run by gas.

We are definitely going to put in the inspection response something about the seller upgrading the wiring. If he doesn't do it, then we will try splitting the cost, but I have a feeling it will have to be done before the bank even approves us. We are going through USDA and they seem to be a little more strict about things. Also I am worried about the cost of insurance with this type of wiring in the home. Plus I am scared to even use the hair dryer. :laughing:

Get three quotes for upgrading the knob & tube and the panel. How do you know 100 amp is the right size for this house? If you have electric appliances and are going to make this your home for awhile, you might want to consider a bigger service. Always make room for future expansion. Hot tub? On demand water heater? Outbuilding? Down the road you might realize the 100 amp panel was a mistake. So think about this now. Maybe you can work a deal where the HO pays half of the COMPLETE upgrade? I would see about this before I did anything. I would NEVER upgrade to 100 amp. I would go 200 if I was going to do it at all. I am not saying you need 200 amp. I am saying you might in the future. So look at this now! 200 amp is the standard upgrade for most homes.
One more thing. Is your house all gas or electric or a combination?

 

[M3 Pete]

Way back in 1996, my insurance company refused to insure my first house, with its 1938 wiring. It was all run in flex conduit, so it was a major step up from K&T, and had a 4-fuse box.

I had to live with it for a year or so before I could afford to upgrade the wiring, move the service line, etc. During that period I was paying some other insurance company through the nose for coverage.

K&T will be more problematic, since you cannot simply pull new wires through conduit, like we did. But if it is a one story house with accessible attic and basement, it will be fairly easy to run new wires.

I updated my panel when I moved into my new place, and 200 amp seems to be the standard upgrade these days.

So I'd do what the others suggest, get some estimates, and not just from the inspector, and go to the seller to see if they will reduce the price or split the cost with you.

By the way, an inspector who also offers to repair what he finds seems like a conflict of interest. Maybe not, but it kind of seems that way.

 

[creeper]

What kind of market conditions exist in the property's area. Sellers or Buyers market? Obviously, you will have much more leverage if its a Buyers.

Always get a commitment and not just a "pre approval" from your insurance company and lender before waiving any conditions.

If the market is favorable to Buyers at the moment then ask for a huge amount off your already negotiated price to accommodate the financial burden of upgrading the whole system. Don't get stuck with the bill.

try not to get emotionally attached to this house until its yours. Keep a good business head and if the deal falls through remember an equally nice house is just around the corner

 

[karabearblu]

Yeah the inspector explained to us that WE had to ask him for the quotes because it was a conflict of interest if he just mentioned it. My husband asked him about it.

It's a two story house, but the attic is accessible through one of the bedrooms and the wiring is pretty much sitting right there.

Way back in 1996, my insurance company refused to insure my first house, with its 1938 wiring. It was all run in flex conduit, so it was a major step up from K&T, and had a 4-fuse box.

I had to live with it for a year or so before I could afford to upgrade the wiring, move the service line, etc. During that period I was paying some other insurance company through the nose for coverage.

K&T will be more problematic, since you cannot simply pull new wires through conduit, like we did. But if it is a one story house with accessible attic and basement, it will be fairly easy to run new wires.

I updated my panel when I moved into my new place, and 200 amp seems to be the standard upgrade these days.

So I'd do what the others suggest, get some estimates, and not just from the inspector, and go to the seller to see if they will reduce the price or split the cost with you.

By the way, an inspector who also offers to repair what he finds seems like a conflict of interest. Maybe not, but it kind of seems that way.

 

[creeper]

Forget the home inspector...get a qualified electrician in the home for a proper quote

 

[karabearblu]

Thanks for the advice. It is hard not to get emotionally attached but I keep pulling myself back from what I want to do on the inside and outside and trying to focus on the heart of the house and what's behind the walls + the business aspect. We have gotten two insurance quotes but nothing set in stone. We are already paying outrageous insurance because my husband's credit is barely there. (Mine is fine but they won't even consider me because I just lost my job due to my business closing).

The market is definitely favorable to buyers right now. The seller is being kind of a pain in the a** though. He isn't leaving room for much negotiating. He agreed to pay closing costs and upgrade the box only after we upped the offer to asking price. The asking price for this house is pretty awesome though for everything that has been done to it already. I HIGHLY doubt he will go for negotiating with the wiring. The house hasn't been on the market long and I don't think he realizes yet that he is going to have to be flexible if he wants to sell this house. He was also present during inspection yesterday and was angered that my husband and I were there, when he was specifically told by his agent he wasn't allowed to be there. Anyway..I'm going off topic.

What kind of market conditions exist in the property's area. Sellers or Buyers market? Obviously, you will have much more leverage if its a Buyers.

Always get a commitment and not just a "pre approval" from your insurance company and lender before waiving any conditions.

If the market is favorable to Buyers at the moment then ask for a huge amount off your already negotiated price to accommodate the financial burden of upgrading the whole system. Don't get stuck with the bill.

try not to get emotionally attached to this house until its yours. Keep a good business head and if the deal falls through remember an equally nice house is just around the corner

 

[joed]

Two story house makes it more difficult to rewire but not impossible. Hole will need to be cut to get tot he first floor ceilings. Get a real electrician not the inspector to quote you. Make sure they are going to replace ALL the K&T. Sometimes they only replace the part you can see or get to easily and leave the hard stuff like the first floor ceiling.

 

[M3 Pete]

He was also present during inspection yesterday and was angered that my husband and I were there, when he was specifically told by his agent he wasn't allowed to be there. Anyway..I'm going off topic.

home inspections are typically done by the buyers and the inspector, in the absence of the homeowner.

You want to be able to talk frankly with the inspector, without the owner being around.

 

[karabearblu]

The inspector is also a licensed electrician.

We did the inspection response today and put in that we want the knob and tube wiring removed and GFCI outlets installed. If they come back and say no, we are probably going to keep looking. We already have a big expense with A/C unit and I don't want to live in a money pit

Two story house makes it more difficult to rewire but not impossible. Hole will need to be cut to get tot he first floor ceilings. Get a real electrician not the inspector to quote you. Make sure they are going to replace ALL the K&T. Sometimes they only replace the part you can see or get to easily and leave the hard stuff like the first floor ceiling.

 

[creeper]

The house hasn't been on the market long and I don't think he realizes yet that he is going to have to be flexible if he wants to sell this house. He was also present during inspection yesterday and was angered that my husband and I were there, when he was specifically told by his agent he wasn't allowed to be there. Anyway..I'm going off topic.

Don't worry about using this forum as a sounding board for your concerns. Thats what it is for.

The price is awesome as you say because its a buyers market and he knows he has knob and tube. But is it awesome enough to cover the cost of new wiring.

This seller is being difficult and he is in for a rude awakening when he realizes his awesome price needs to reflect both the market conditions and the defects.

In all my deals I've done as a Realtor, not once have I experienced a Seller getting angry for the potential buyer being present. Does he expect you to make the biggest investment of your lives, sight unseen? Most Sellers either leave or offer coffee and doughnuts and stay clear unless called upon.

Is your Realtor being assertive enough?

If you threaten to walk if he doesn't negotiate and he takes you up on it, you can always resurrect the offer in a few weeks after the seller has had time for reality to set in.
In the meantime you can keep looking

 

[AllanJ]

Is your Realtor being assertive enough?

Caution: The broker who you work with when you simply walk into a real estate office must look out for the best interests of the seller.

You must specifically ask a broker in the office to act as a buyer's broker where there is an agreement that you might pay some of the commission, if you want the broker to be assertive for you. Not all offices have buyer's brokers and in a few instances dealing with specific houses your buyer's broker must bow out due to conflict of interest.

Now you can ask any question you want and a broker representing the seller is expected to submit the question to the seller. The seller has the right to remain silent including not counteroffering an offer he does not like, but the broker should relay that tidbit of information to you. Neither the seller nor a seller's broker is obligated to volunteer additional information to you beyond what you asked for, other than certain disclosures that are required by law.

He agreed to pay closing costs and upgrade the box only after we upped the offer to asking price.

That is the same as having you pay those costs.

Oh, by the way there will be timing (logistics) problems. You don't want to arrange for and pay for rewiring the house prior to closing. The house might be uninsurable after the closing when the seller's grandfathered insurance stops and before the rewiring is finished. And it will take some time to accomplish the rewiring. With this in mind, you may have to be prepared to walk away from that house.

 

[creeper]

[quote=AllanJ;917309]Caution: The broker who you work with when you simply walk into a real estate office must look out for the best interests of the seller.


Why on earth would you say that?
Unless that Broker(age) happens to be the one that is specifically under contract to that particular Seller then no fiduciary duties lay with anyone.
If as a Buyer you seek my services without a contract then you are a customer and are still legally entittled to duty of care. Which includes acting in the best interests of that customer. As soon as you sign you become a client and then are entittled to fiduciary duties which include client confidentiality.

You must specifically ask a broker in the office to act as a buyer's broker where there is an agreement that you might pay some of the commission, if you want the broker to be assertive for you. Not all offices have buyer's brokers and in a few instances dealing with specific houses your buyer's broker must bow out due to conflict of interest.

Disclose Disclose Disclose...thats how its done. I'm not sure if multiple representation is allowed where you are, but where I am as long as both the Seller and Buyer agree in writing the same agent can handle both sides of the deal. It can be a tricky situation, but if you do everything above board it can work. Double ending the deal sure is sweet.

Now you can ask any question you want and a broker representing the seller is expected to submit the question to the seller. The seller has the right to remain silent including not counteroffering an offer he does not like, but the broker should relay that tidbit of information to you. Neither the seller nor a seller's broker is obligated to volunteer additional information to you beyond what you asked for, other than certain disclosures that are required by law.

That is the same as having you pay those costs.

Oh, by the way there will be timing (logistics) problems. You don't want to arrange for and pay for rewiring the house prior to closing. The house might be uninsurable after the closing when the seller's grandfathered insurance stops and before the rewiring is finished. And it will take some time to accomplish the rewiring. With this in mind, you may have to be prepared to walk away from that house.[/quote]

Or you can ask for a bridge mortgage and have the wiring done after closing but before occupancy

 

[AllanJ]

Or you can ask for a bridge mortgage and have the wiring done after closing but before occupancy

What happens if the regular mortgage loan that will succeed the bridge mortgage is not approved?

Why on earth would you say that? Unless that Broker(age) happens to be the one that is specifically under contract to that particular Seller then no fiduciary duties lay with anyone.

If you expect to receive a co-broke commission from the seller's listing brokerage then you have a fiduciary relationship with the seller. In the process of disclosing that you are representing the buyer the amount of co-broke commission may or may not be negotiated.

A seller signs up with a brokerage with nationwide connections with the intent that all of those offices nationwide will be acting in his best interests unless otherwise disclosed.

 

[creeper]

Your lender will commit to both at the same time. I don't mean to be rude but it would be kind of silly for a bank to give a bridge mort without approval on the entire loan don't you think