Does replacing electrical/rewiring improve home value?

[Miles Stanley]

Any thoughts?

My electrician is recommending that we rewire the entire house bc the existing wiring is copper but does not have a ground (built in 1968). We plan to BRRRR this one. He says it would improve home resale value and we could use 3-prong outlets (that actually serve a purpose) so things like PC's and other devices that require that plug could have grounding.

Has anyone done this or have any insights? The numbers work "OK" if i have to spend the extra money, but i need to determine if i NEED to.

I think long-term, I'm more concerned with liability than sort term gains/savings. Since it'll be rented safety and liability are chief concerns for me.

Thanks

[Erik W.]

@Miles Stanley, yes, it will increase the value.  But the question you should always ask is does it increase the value ENOUGH to justify the expense?

If you go onto just about any free website that estimates the cost vs. value-add to a SFH for improvements, you will find, without fail, that the repair/upgrade that benefits the most is paint. Paint is cheap but improves the value by a significant amount. Other remodels like bathrooms and kitchens only add about 65 cents per dollar spent on the improvement.

Plus, who cares about resale value?  You are BRRRRing this property, right, so you intend to keep it.  All you care about is the appraisal.  In my town, appraisal is mostly invluenced by the following factors, in no particular order:

1) finished, livable square footage

2) number of beds

3) number of baths

4) central HVAC vs. other type of heat/cooling source

5) garage space

6) yard fencing

Beyond that, pretty much everything is going to suck more money out of your pocket than it returns.  

Maybe appraisers in your market work differently, but in my town I would expect to pay around $5,000-$7,000 for a complete rewire, up to code, by a licensed professional, that would replace every foot of active wire. I doubt it would boost the re-sale by by much more than $2,000, and it may have $0 impact on an appraisal. A clear loss, from a BRRRR view point because the appraisal value and the re-sale value are not the same. I know this because I have recently had 2 properties with fuse boxes appraised for re-finance, and when making adjustment for comparison to comp sales I have never seen the appraiser adjust even $1 of value for upgraded electrical. A home buyer might pay a little more, but not the full $5,000-$7,000.  Renters won't pay a dime more in rent either.  If it works, they'll pay.