The Basics: Home Inspections Part 1 Knob and Tube

Podcast Episode 28:  “Home Inspections Part 1 Knob and Tube.”

Old, unsafe, hidden behind walls knob and tube wiring was discovered by a home inspection. The buyer avoided a $30,000 repair bill.

Download the audio file HERE.

Download the handout for parts one and two HERE.

(Mac control + click + “save as” / PC right click + “save as”)

Home Inspections

“I don’t need no stinkin’ inspection!” Effectively, that’s what a lot of buyers say when they fail to get a home inspection. It is wrong, wrong, completely wrong. Home inspections have gone from an oddity, hardly ever done, to an essential tool in every investor’s toolbox. This is the first part of a two-part series on home inspections. Part one gives us graphic examples of how a home inspection can help. Part two will deal with how to pick a home inspector, home inspection contract schedules and dealing with those inspector-revealed surprises.

Knob And Tube?

This Tale comes from an e-mail that was so descriptive I am reprinting it here. To help understand the e-mail, please note that ‘knob and tube’ is an out-dated and now forbidden way to wire a house. Wikipedia says, “It consisted of single-insulated copper conductors run within wall or ceiling cavities, passing through joist and stud drill-holes via protective porcelain insulating tubes, and supported along their length on nailed-down porcelain knob insulators”. Google ‘knob and tube’ for more info and especially pictures of fires caused by knob and tube wiring.

Now here’s the e-mail:

“We went to Saint John New Brunswick to look at properties mainly because of the price point in the area. Put an offer in on a 3 plex that was eventually negotiated down to 185K. Rents were a little more than $3000 a month total including heat. Cap Rate on the property was over 19%, tenants had been there on average for 2-3 years, so it looked great.

Went through our due diligence on the property. Expenses, rent rolls, etc. all came through as expected. We also had a property inspection done which was even more of a requirement than usual because of the age of the building in Saint John as opposed to Alberta. The inspection was thorough and discovered some minor problems we expected and one major one we didn’t. All of the visible electrical including the service coming into the building, the breaker panels, and wiring that was visible had been replaced however, none of the wiring in the walls had been replaced and was the original knob and tube wiring that the pig tailed to the new visible wiring. They tried to pass the building off as new wiring building when it wasn’t.

Getting insurance for the property and passing fire codes now became an issue if we didn’t want to replace the wiring. If we did replace the wiring we would have had to kick out the tenants to complete the task which was estimated at a $30,000 repair bill. We went back to the owner to discuss what we could do about this, negotiate a lower price or cash back for repairs or something. He told us he wouldn’t negotiate further and would hope any new offers wouldn’t be as diligent with their property inspection as ours was.”


Moral of the story. A $500 property inspection saved us a $30,000+ surprise somewhere down the road.

Contact Barry McGuire now. Alberta real estate needs an Alberta lawyer.