Is Ungrounded Electric a Deal Breaker for End Buyer?

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Aaron McGinnis
Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
12y
Originally posted by @Brandon Sturgill:

 And you know what....it has been safe and effective for the last 55 years, so I don't see any issues in the near future. 

Totally agree. Grandma didn't have a problem plugging in her old-timey radio, so your buyer totally won't have any issues plugging in their TV, computer, stereo system, vacuum cleaner, flat screen monitor, cell phone, refrigerator, dishwasher, modern HVAC, washer and dryer, upgraded lighting package, and stove... and then running them all at the same time over undersized, out of code wiring with no grounding.

Totally okay. Totally not a problem. Residential electric living loads totally haven't changed at all in 55 years, and code totally wasn't updated for any meaningful reason except to give shady contractors and city inspectors a job.

I mean, what could go wrong running 200 amps through 50+ year old cloth-wrapped wiring sized and designed to run 60 amps worth of load? It's not like wiring ever overheats and causes cataclysmic electrical fires. Shoot, all those places that require you to completely update wiring when you swap out a panel are positively criminal and just trying to squash your capitalistic spirit and inhibit your ability to make a profit.

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  • Aaron McGinnis
    Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
    12y

    I personally have a problem with selling a house with partially-upgraded electrical. 

    I know people who have unwittingly bought houses with ungrounded wire, figured it out later, and been mad as hell about it. I think most people buying a renovated house expect modern electrical convenience.

    0Reply
  • Brandon SturgillBusiness Member
    OP
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    12y

    Thanks @Aaron McGinnis 

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  • Doug W.
    Flipper/Rehabber · Alexandria, VA · Member since 2014 · 461 posts · 262 votes
    12y

    It can be very costly to upgrade all of the wiring. You also need to figure in the costs to repair drywall, etc. from that work.

    As far as reselling.... the house was built in the 1950's. Copper wiring with no ground is what was used back then. So it's not like the electric is unusual for the time period. And a buyer should expect that.

    Here is what I just did in a 1952 home: 

    1) Upgraded the panel and grounded it because the house was not grounded prior to this update.

    2) Upgraded the service and box from 60 to 200 amp

    3) Switched out all of the existing 2-wire ungrounded receptacles with 3-prong receptacles that are GFCI protected at the breaker or receptacle. We also added AFCI protection at the breaker for the bedrooms, per current code requirements. 

    4) All of the new receptacles that are on the existing ungrounded 2-wire copper circuits have been labeled with "GFCI Protected" and "No Equipment Ground". 

    5) New circuits have new wiring. 

    2Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    12y

    Housing stock in Ohio is very old. Very common to have old wiring. 

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  • Brandon SturgillBusiness Member
    OP
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    12y

    @Doug W.  Thanks for the tips. I like and agree with the explanation that the electric is common for that period of house. And you know what....it has been safe and effective for the last 55 years, so I don't see any issues in the near future. 

    I think your fixes will put the end buyer at ease as well. Much appreciated.

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  • Brandon SturgillBusiness Member
    OP
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    12y

    @James Wise  Thanks for the perspective

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  • Aaron McGinnis
    Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
    12y
    Originally posted by @Brandon Sturgill:

     And you know what....it has been safe and effective for the last 55 years, so I don't see any issues in the near future. 

    Totally agree. Grandma didn't have a problem plugging in her old-timey radio, so your buyer totally won't have any issues plugging in their TV, computer, stereo system, vacuum cleaner, flat screen monitor, cell phone, refrigerator, dishwasher, modern HVAC, washer and dryer, upgraded lighting package, and stove... and then running them all at the same time over undersized, out of code wiring with no grounding.

    Totally okay. Totally not a problem. Residential electric living loads totally haven't changed at all in 55 years, and code totally wasn't updated for any meaningful reason except to give shady contractors and city inspectors a job.

    I mean, what could go wrong running 200 amps through 50+ year old cloth-wrapped wiring sized and designed to run 60 amps worth of load? It's not like wiring ever overheats and causes cataclysmic electrical fires. Shoot, all those places that require you to completely update wiring when you swap out a panel are positively criminal and just trying to squash your capitalistic spirit and inhibit your ability to make a profit.

    7Reply
  • Rusty Thompson
    Real Estate Investor · Salem, OR · Member since 2011 · 422 posts · 149 votes
    12y

    I would personally upgrade it. Don't know what the cost of electrical is in your area, but its not actually that much work if their is a attic space or unfinished basement. A little harder with a crawl space, but not to bad. If your making a offer on a flip I would just subtract if from you offer price.

    1Reply
  • Doug W.
    Flipper/Rehabber · Alexandria, VA · Member since 2014 · 461 posts · 262 votes
    12y

    Despite @Aaron McGinnis sarcasm being unproductive to the conversation I am going to dignify the post with a sarcastic response of my own: 

    [sarcasm] In my case I suppose that the 5 master electricians who have worked on my rehab, the who knows how many staff from the regional power company who agreed to upgrade the service from 60 to 200 amps (including a new line from the pole, new point of connection, new drop and new box), the county permitting office who approved the electrical permit, and the county inspector who approved all of the work during his concealment inspection must be in cahoots with each other. I might even suspect that the insurance company, local fire department, and my Realtor are also in on the plan. I guess that only leaves me as not part of the gang. [/sarcasm]

    To bring this back to a productive response; here is more to chew on: 

    Is the situation ideal? It depends on how you define it. Is the rehab a complete gut or a cosmetic update? Could all new wiring be run through crawl spaces, attics, and walls without significant labor and damage? What does the budget and ARV dictate? There are probably a dozen questions like this that each investor needs to ask himself before deciding on whether the cost (investment) is worth it. A buyer needs to ask himself the same questions before buying. Similar to something I wrote earlier: If you're buying a 1950's home and expect everything in it to be like a brand new 2014 home you had better either reset your expectations or be willing to pay for the updates.

    Let's not act like it either has to be either completely left as-is or completely brought up to 2014 new construction standards. There are plenty of alternatives in the middle that are safe enough if the work is done correctly. That's what the inspectors should be checking for when they are on the job. If the outcome resides in the middle somewhere could I still get an electric shock from an appliance or light fixture that doesn't have a ground? Yup. And that's a risk I take, amongst many others, of buying a home in 2014 that built in the 1950's. 

    [sarcasm] In our next series we will be discussing galvanized drain pipes. Has our fast food culture put too much of a strain on old plumbing systems? [/sarcasm] 

    2Reply
  • Chris Simmons
    Real Estate Agent · Owasso, OK · Member since 2014 · 517 posts · 400 votes
    12y

    @Doug W. 

    I agree.  I have 3 rentals from the fifties with the same wiring and have owned older properties with functioning Knob and Tube wiring.  Make the necessary updates to get it safe and dependable.  My 2nd house has the old screw in fuses in the bedroom closet.  I had that replaced with an exterior box with updated breakers and GFI's as needed along with a few new lines for a ceiling fan etc.  Using proper sized breakers prevents the issues of having too much plugged into 1 circuit.  It was a lot easier back in the day to screw in a 50 amp fuse which would allow too much load on the line.  With a 15 amp breaker....plug 27 microwaves into 1 circuit.  Let me know how that works out for ya.

    Will I redo the electric eventually?  Sure.  Maybe it is after a tenant tears up the place or maybe it is after it has cash flowed for 10 years and I might be thinking about selling.  Maybe it is just that time for new electric, plumbing cabinets, vinyl siding, windows etc.  Does it have to be today?  Is it a hazard before then?  No.  And I have licensed electricians that i trust telling me this.

    2Reply
  • Brandon SturgillBusiness Member
    OP
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    12y

    @Aaron McGinnis  Thanks for raising the issue. I do agree that safety is paramount and that a rehab must be correct. But there has to be a point the line is drawn. I think a lot of people are afraid of electric because they simply don't understand it...When is the last time you set a panel or rewired a house....and really, how many rehabbers truly understand electric. OR can you find an article anywhere about a 1957 ranch burning down because the electric wiring was installed incorrectly by the builder...Again, I see your points here and want to draw the distinction that I am not suggesting anything substandard, just asking from an end-buyers perspective.

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  • Brandon SturgillBusiness Member
    OP
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    12y

    @Doug W.  Thanks. This is valuable information. 

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  • Kathleen Leary
    Princeton, KS · Member since 2014 · 357 posts · 169 votes
    12y

    My rental had (partial) knob-&-tube wiring, no work boxes behind fixtures/outlets & the entire system is ungrounded. I have made upgrades with an eye toward safety, such as work boxes, dedicated circuits for major appliances, removing lamp cord inside the walls (!), etc. but I did not strip & upgrade the entire system. The money didn't make sense.

    If I were selling it, I would re-do the whole thing from the panel out, just because we use so many more appliances now & pull more power. I would, naturally, promote the upgrade as a selling point. 

    If I were looking at a property with "antique" wiring, I would use that as a point to drop the price. 

    0Reply
  • Marcia Maynard
    Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    12y

    @Brandon Sturgill 

    First... Health and Safety and Functionality.

    Second... Convenience and Amenities for today's market.

    Third... Cosmetics.

    That's how I would prioritize, not only for electrical projects, but also for plumbing, HVAC, carpentry, painting, windows, doors, foundation, roof, drainage, landscaping, etc.

    @Aaron McGinnis @Doug W. all make good points. Great to hear the different perspectives!

    0Reply
  • Debra Leeson
    Investor · Columbus, OH · Member since 2014 · 74 posts · 23 votes
    12y

    old wiring is a problem

    0Reply
  • Debra Leeson
    Investor · Columbus, OH · Member since 2014 · 74 posts · 23 votes
    12y

    abc

    0Reply
  • Walt Payne
    Real Estate Investor · Sebastian, FL · Member since 2014 · 812 posts · 432 votes
    12y

    @Aaron McGinnis  is right. Just because you were allowed to do something doesn't mean it is the best or suggested way. Even if it is legal in some places, it is not a good practice.

    Many municipalities will force you to meet current electrical code when you get permits to do work on existing. Why? For exactly the reasons Aaron stated. Also, @Doug W.  are you aware that some of the newer tools, appliances and electronics will not work without a ground? Think the buyer will say sweet things about you when that happens?  

    Another issue not mentioned by anyone. 1950 electrical specifications will leave way too few outlets, and way too many outlets per circuit. Not only dangerous in itself but requiring things like power splitters and extension cords in unsafe ways. And if you are updating enough to put an adequate number of outlets, why not do the job right? Like anything else, this is a part of pricing the job out from the beginning. Know what is needed before you buy.

    1Reply
  • Walt Payne
    Real Estate Investor · Sebastian, FL · Member since 2014 · 812 posts · 432 votes
    12y
    Originally posted by @Brandon Sturgill:

    @Aaron McGinnis  Thanks for raising the issue. I do agree that safety is paramount and that a rehab must be correct. But there has to be a point the line is drawn. I think a lot of people are afraid of electric because they simply don't understand it...When is the last time you set a panel or rewired a house....and really, how many rehabbers truly understand electric. OR can you find an article anywhere about a 1957 ranch burning down because the electric wiring was installed incorrectly by the builder...Again, I see your points here and want to draw the distinction that I am not suggesting anything substandard, just asking from an end-buyers perspective.

    Electrical fires are not unusual in old sections of any city. There are reasons why electrical codes have evolved to where they are. Electrocution is unusual, but happens, fires are not frequent but often enough to justify doing it right. What number of deaths is an acceptable number? How well would your conscience deal with knowing you could have prevented a death, especially of a child?

    BTW I understand electric. I have a degree in electronics engineering. I don't fear it, I respect the power, and danger involved when things are not done right.

    2Reply
  • Brandon SturgillBusiness Member
    OP
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    12y

    @Walt Payne  Thanks for entering the conversation. I agree with the bottom line. Do it right. Make it safe...ultimately as investors, our name is attached to all the properties we sell or hold. Good to know you know electric...could use the occasional consult:)

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  • Aaron McGinnis
    Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
    11y
    Originally posted by @Brandon Sturgill:

    @Aaron McGinnis  Thanks for raising the issue. I do agree that safety is paramount and that a rehab must be correct. But there has to be a point the line is drawn. I think a lot of people are afraid of electric because they simply don't understand it...When is the last time you set a panel or rewired a house....and really, how many rehabbers truly understand electric. OR can you find an article anywhere about a 1957 ranch burning down because the electric wiring was installed incorrectly by the builder...Again, I see your points here and want to draw the distinction that I am not suggesting anything substandard, just asking from an end-buyers perspective.

    I would say that a healthy respect for electric is pretty much a necessity for anyone working on a house. And yes, a bit of fear isn't a bad idea either. I've seen exactly how fast a house can burn down from an electric fire... I think it should scare any right-thinking person just a bit. (I've also seen the effect high-voltage can have on the human body... that isn't pretty either)

    I think I'd have an easier time trying to remember how many houses with old, ungrounded wiring we HAVEN'T rewired. I'd say it's about 1 out of the last hundred or so, and only then over my great protests to the owner of the house.

    An electric fire is not exactly news worthy, but talk to any insurance agent (or fire fighter) and you'll get a pretty clear picture of how dangerous old wiring is.

    1Reply
  • Michael Fundaro
    Structures Engineer · West Hartford, CT · Member since 2015 · 55 posts · 20 votes
    10y
    Originally posted by @Doug W.:

    It can be very costly to upgrade all of the wiring. You also need to figure in the costs to repair drywall, etc. from that work.

    As far as reselling.... the house was built in the 1950's. Copper wiring with no ground is what was used back then. So it's not like the electric is unusual for the time period. And a buyer should expect that.

    Here is what I just did in a 1952 home: 

    1) Upgraded the panel and grounded it because the house was not grounded prior to this update.

    2) Upgraded the service and box from 60 to 200 amp

    3) Switched out all of the existing 2-wire ungrounded receptacles with 3-prong receptacles that are GFCI protected at the breaker or receptacle. We also added AFCI protection at the breaker for the bedrooms, per current code requirements. 

    4) All of the new receptacles that are on the existing ungrounded 2-wire copper circuits have been labeled with "GFCI Protected" and "No Equipment Ground". 

    5) New circuits have new wiring. 

     Doug,  about how much did it cost you do to the GFCI work per outlet (step 3)?  I have a duplex under contract in Connecticut with about 40 ungrounded, 2-prong outlets throughout the property.

    Thanks,

    Mike

    0Reply
  • Doug W.
    Flipper/Rehabber · Alexandria, VA · Member since 2014 · 461 posts · 262 votes
    10y

    @Michael Fundaro the master electricians here charge $40 per outlet. That includes a new tamper resistant 3-prong receptacle and the labor.  

    I have talked to handyman-types who are trained in electrical work but not licensed electricians and they have quoted $25 per receptacle for parts and labor. 

    0Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    10y

    @Brandon Sturgill,

    I grew up in an older home in the Chicago suburbs built in the post-war housing boom.

    If the existing wiring is in BX with plastic insulated copper conductors at least 14 gauge, you should be ok as long as you have continuity between the armor and the earth ground. You can ground outlets to the box/BX and a typical three-light outlet tester should show the outlet grounded if it's wired properly (neutral to the large blade, hot wire ("mains") to the other).

    Wiring doesn't "break", though bad connections can cause issues.

    Today's appliances - clock radios, computers, flat screen displays, etc. draw much less power than their earlier counter parts: tube radios, TVs, etc. Newer large screen TVs draw about as much as an old tube TV with tube circuitry. LED lights and CFLs like draw much less power than incandescent lights do. 100 amp service is more about central A/C and electric dryers than anything else.

    Most homes 2000 SqFt or less are fine with 100 amp. Larger homes or more demanding homeowners / tenants may call for 200 amp service.

    My $0.02...

    1Reply
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