Knob and tube wiring

[Kyler Tarr]

I am on contract to purchase an investment property in Ohio and the inspection showed the house has knob and tube wiring even though it was built in 1959. I had an electrician go out today to inspect and give me a quote to fix and should receive the report tomorrow. 

I talked to several insurance brokers and they both said majority of insurance companies do not provide coverage on homes with knob and tube wiring due to potential fire hazard. There are some that provide coverage but of course the premiums and higher. 

I wanted to see if anyone has experience with or owns any properties with knob and tube wiring and what I should do. I will ask the seller for a concession to replace the wiring, which could be $10k-$30k, but I have a feeling they will reject. 

My question is do I go forward with purchasing the property and deal with the higher insurance and potential hazard or is it smarter to walk away? Any advise is greatly appreciated on the subject! 

Thanks!! 

[Patricia Steiner]

If you don't mind having a 'financial bomb' waiting to ignite, go ahead and move forward with the wiring in place. While you might be able to find an insurer who will accept it initially, it's just a matter of time before they cancel the policy; your expense will also be higher. 

I recommend making the wiring replacement a contingency - and for it to be completed prior to closing. The seller can pay for it at closing (the title agent will cut the check to the trade to ensure there is no resulting lien) and provide proof of the replacement to the insurance provider.  

I've had this done - and the electrical panel will need replacing as well - in both investment properties and my home historical home.  I have several quotes in the $20k-$30k range - before finding a 'mom and pop' licensed electrician who did it for $9k.  It's laborious, messy - but it was far less damaging/challenging than the photos found on the internet...even with plastered walls.  

Skip the financial bomb and deal with it upfront.  It has to be done so it might as well be done on your terms and timing. 

Best...

Make the wiring replacement a contingency.