by Scott Kompa
Many inspections take place when selling a home. There are the buyer’s initial showing/inspection, the buyer’s home inspection, the certificate of occupancy inspection (or CO for short), inspection by lenders surveyor, appraiser, and even a possible inspection from the buyers mortgage company so the buyer can obtain homeowners insurance. Most mortgage companies require home owners insurance as a stipulation for the loan to move forward at settlement.
One of the many tasks that I perform when listing a home for sale is to go through the home and try to determine issues that might keep the home from having a smooth transaction. My philosophy is to try and address these issues if needed to insure a smooth home selling experience. One issue that was once a small issue is now becoming a huge issue. Knob and Tube Electrical Wiring that is in older houses is becoming a problem. What is knob and tube? Some people call it K&T for short. Knob and tube wiring was a standard method of electrical wiring in homes until around 1930. It consisted of protective porcelain insulating tubes and insulated wires. Home owners insurance companies used to offer insurance on knob and tube wired homes. Now, somehow insurance companies feel the wiring is no longer safe. I have talked to electricians who disagree with the idea but they do agree that today’s appliances and home items use a lot more electricity than what knob and tube wiring was designed to handle. They also said that over time, the insulators on the wiring becomes brittle and can fall off exposing live bare wires.
Around 10 years ago, the home owners insurance companies started to not issue new insurance policies for knob and tube homes. Home owners insurance was obtainable through polices from some companies like Lloyd’s of London at an increased premium. And now it appears that that is no longer an option. This is a major obstacle in real estate and selling a home because the buyer cannot obtain home owners insurance which is necessary for a buyer to obtain a mortgage. Sellers say I have insurance and the buyer can get it too. However, it is now an issue.
At this point, one of the only options left is for the knob and tube wiring to be removed. This is possible by the seller or the buyer. The buyer can (at this point) still get a home owners insurance policy with knob and tube electric wiring only if they agree to remove it within so many days. There are only a couple of companies that will issue this policy. It sometimes becomes a significant cost to remove the wiring. But, by removing or abandoning the knob and tube wiring allows for the sale of the home. In the end, this is the only solution if the buyer wants or needs home owner insurance.
Of course call and obtain quotes from more than one licensed electricians. You will find out that one quote may be less than the others because the job is very labor intensive. In the Southern New Jersey area I have found a great electrician that does the job at a fair price with minimal wall cutting and hole making. Contact me for more information.