You’ve snagged a great purchase price on a classic late-1960’s home being vacated by aging owners who have lived there for 30 or 40 years. Before purchasing the property as a real estate investment, you were pleased to find that the owners took care of it throughout the years. The roof was replaced a few years ago, the walls, ceilings and floors are in good shape, and you’ll update the carpets and wall color. Overall, a good buy!

Except for one teeny, tiny little issue … the practical-minded 1960’s builder generously doled out from two to four outlets in each room – but all are still two-prong outlets! Clearly the wiring is outdated in a modern world with an abundance of three-pronged plugs powering electronics, power strips and extension cords.

Not a problem! It’s an easy DIY to switch the two-prong outlets to three-prong – right?

Oops – simply replacing the outlet without grounding it properly creates a serious riskof frying expensive electronics such as flat-screens, cable boxes, DVD and CD players, computers and printers … or worse, delivering a shock that could electrocute.  Even surge protectors won’t protect if the outlet isn’t properly grounded.

It’s true that older houses are normally grandfathered in to the National Electrical Code as it was when they were built. But that’s not much help to a homebuyer with a full set of modern electronics, who also wants to know that any outlets switched from two-prong to three-prong were correctly grounded, and that aging wiring and insulation have not deteriorated into a fire hazard.

Top-of-market condition includes wiring that the average homeowner can live with comfortably with the usual modern electronics. Correct re-working of outdated outlets throughout the home can cost hundreds, if not thousands, of dollars in materials. If an electrician is involved, the cost can easily run to $3,000 or more.

If you go for a complete re-wiring of a home sized from 1,700 to 3,500 square feet, expect to spend from $5,000-$10,000, or much more. But full re-wiring isn’t always necessary if the wiring is basically safe, as two-pronged outlets may be completely serviceable in areas where the major use is for two-prong plugs for lamps.

Count on it that home inspectors are wise to electrical issues in older homes (and possibly the realtor, and even the homebuyer).

So what should you do? Just as with any other major checklist item – roof, foundation, plumbing – inspect rigorously, be ready for the worst possibility and forecast costs accordingly.

Since your goal is selling at top-of-market price for a property in top-of-market condition, look on wiring and outlets as a critical pre-purchase planning & budgeting checklist item, BEFORE finalizing your own purchase price on any older property!

What was your solution to outlet and wiring problems on one of your most challenging real estate investment properties?

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