Profile picture for jnmcfeeley

do I need to update electrical system before selling? Is it worth it?

Selling a single family home near Philadelphia. Code requires removal/ new wiring for knob and tube plus wiring for smoke alarm, update outlets near sinks. SHould we incur this cost now or deal at settlement? It will be in neighborhood of 20,000 $ for us to do it all. There is already little to no profit in sale due to over mortgaging.
  • November 18 2013 - US
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Answers (7)

Profile picture for CallTheSisters
Knob and tube is a huge problem.  FHA won't finance it.  Most insurance companies won't insure it.  You cannot deal with it at settlement if the buyer cannot get the mortgage because of it there is no settlement.

Tough choice but the reality is it is very unsafe.
  • November 26 2013
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Profile picture for sunnyview
Knob and tube is uninsurable or may have very high insurance so that cuts your buyer base right out of the gate. I understand your position, but unless the house will be attractive to cash buyers you may have to bite the bullet and replace the wiring to a minimum insurable standard.

That may mean not bringing the house up to current code with full GFCI's or wired alarms, but replacing just the knob and tube so your buyer can get a conventional mortgage. Check with your agent and the City about the minimum that you can do to sell before you decide what to do.
  • November 19 2013
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I agree.  If code requires it you are going to have to do it any way.  If it is not done the buyer might go to a similar house with the work already completed and ready to go.
  • November 19 2013
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Quick and Simple... Depends on the State and City Codes.  You can always advertise "As Is" and make it clear in the agreement you are not going to perform any of the electrical repairs.  The gamble is it more than likely will have to be a All CASH buyer, unless you have a rare circumstance when the lender allows it.

Thank You,
Kevin Stocks - Realtor
  • November 18 2013
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The repairs required could be considered a safety issue that is sure to come up on a home inspection, and more than likely an appraisal. To widen your audience of buyers & to limit your own liability, I would suggest making the repairs now to ensure for a smoother transaction later, if you were my seller.

Suzanne Olson, REALTOR
  • November 18 2013
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It depends on how old the electrical system is. It's shocking to see some of what people are living with in their homes. One house I listed had old "cloth" electric and most of the outlets were actually dangerous to use.
The buyers will surely find this when they do inspection and they will either ask for a credit to repair, or ask you to do it anyway.
In my opinion you would be better off taking care of all repair issues in advance.
  • November 18 2013
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If these fixes are a mandatory state or county requirement, they will need to be done before close of escrow unless perhaps you get a cash buyer. You could wait, price the property accordingly, and see if you could negotiate this with the buyer...who pays for what.

However, you will (depending on your market) likely see a quicker and perhaps a larger profit made on a home which needs less work. Speak with your local realtor to ask these questions. A good realtor should be able to guide you through these types of questions.

Good luck!

Tesa Noonan, REALTOR
  • November 18 2013
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