Selling a House with Knob & Tube or Aluminum Wiring

Occasionally I am called to do an inspection or an electrical quote for a house sale for the potential buyer. More often than not it is because there is aluminum wiring or knob and tube and the buyer wants to know if it is safe or wants to know the cost of remediation. I am not a real estate agent but to me the risk of losing a potential sale is considerably higher if the buyer has to deal with these issues. If I were the seller I would do this long before an open house sign was put on my lawn and people started trudging through my house.

From what I have seen the seller is at a disadvantage when the potential buyer finds out there is aluminum or knob and tube. You can bet the buyer is going to use this to beat you down in price. If you have aluminum wiring or knob and tube don’t wait for the potential buyer to bring it up. An old wizened sales guru once said don’t hide from the problem, brag about it. Your customer is going to find out so why wait. Use your deficiency as a selling feature instead of a negative; in sales you want positive feelings. If you have to scramble to get a quote on remediating the house wiring during the sales process you might/probably lose the potential buyer. Get it done before and use it in the negotiations. If you make the buyer get the quote themselves they may not want to be bothered and move on to the next house. The goal is to sell the house ASAP and by not addressing the deficiency you can bet it will take longer to sell your house.

Make Knob & Tube or Aluminum Wiring a Selling Feature

What? You’re thinking I am out of my mind. Maybe, but consider this. Build the cost of rewiring into the house price and be firm on your price if the house wiring is the major stumbling block. You probably will only recoup the cost of the rewire but so what: your goal is to sell your house and get the full value. If the potential customer is having to deal with the rewire then they will try to get you down as low as possible or worse, walk away and go on to the next house.

So what do you get quoted? For a house with knob & tube a rewire is almost a foregone conclusion. You would be hard pressed to find an insurer to insure the house. So get the quote to rewire and tell the buyer it will be done before they move into the house. No more objection. See the example below:

House Value with Copper Wiring: $250,000

House Value with Knob & Tube: ??? this is anybody’s guess

Cost of Rewire: $10,000.00

Cost of Repair and Paint Touch Up: $2500.00

Selling Price:  $250,000

I would build in half the cost of the rewire and repair in the selling price so you have some room to negotiate (ie. Selling price $250,000 + $6250). Maybe you will get lucky and they will offer what you want. Or ask $250,000 and stay firm. Whatever you decide, you have made an almost certain objection into a positive: brand new copper wiring. If you can’t afford to pay for the wiring upgrade before the sale is completed try to get the buyer to build it into their mortgage. Tell them you will subtract the price of the rewire and repair from the selling price and close the deal.

For aluminum wiring I would tell the potential buyer you will pay to have the aluminum wire completely inspected and verified. Better yet, before you even put the house on the market get this done and have the inspection report ready to show a potential buyer when the issue comes up (which it will). If the wiring was done properly and the proper devices installed (ie. aluminum rated receptacles and switches) this should only cost less than two hundred dollars or less. If the receptacles and switches are not rated for aluminum it will be more costly as they will need to be replaced.

What if they tell you they want the aluminum wiring replaced? I can understand why a potential buyer might take this stance. You will always be at a disadvantage with aluminum because it restricts your options when renovating and it will always be a “black mark” when selling the house. Don’t get me wrong, I am not saying aluminum wiring is unsafe. A properly wired house with aluminum and devices (receptacles and switches) that are compatible with aluminum is safe. What is a reality is the stigma of aluminum wire in people’s minds which is hard to erase.

Unlike knob & tube, you really don’t need to replace the aluminum because an insurer will insure the house. However, if someone really wants to replace the wiring be ready to give them an option so you don’t lose the sale. If you have the quote for the rewire completed you can negotiate with the buyer to pay for half of the job in the selling price of the house. See the following example:

House Value with Copper Wiring: $150,000

House Value with Aluminum Wiring: ?? this in anybody’s guess

Cost of Rewire: $7500.00

Cost of Repair and Paint Touch Up: $1500.00

Selling Price (customer pay half of rewire): $145,500

I would negotiate hard to get them to pay half because technically it does not have to be done. What’s most important is that you are ready for this objection and have the opportunity to make the sale and not prolong the sales process if the buyer has to deal with it.

Closing the Deal

Now that you dealt with the objections up front you can work on closing the sale. What was once a huge obstacle to the sale – inadequate wiring – is now a benefit in that they will be getting brand new wiring. You might suggest (or most often your real estate agent) to the potential buyer that now may be a good time to consider their future electrical needs (eg. hot tub, home office, home theatre, new minisplit) and suggest they consider completing this (at their cost of course) when the wire remediation is completed. Since the electrical contractor will already be there it will cost them much less than waiting to do it in the future. A few extra grand on their mortgage won’t cost much over 20 – 25 years. Get them thinking about the possibilities which should get them excited increasing your chances of selling the house.

 

Attila Fust

Owner, Red Seal Electrician

Wattsource Electrical