You hear these “bad words” in real estate all the time. From HGTV shows, to consumer reports, and in “how to guides;” these items are going to scare you into submission.
Let’s take a look at what they are, why they’re bad, and whether the response is overblown.
I was in a house the other day that had a “his” closet in the master bedroom, and a “hers” closet in the second bedroom.
My clients decided that this house wouldn’t work for them as a result, and I asked them to reconsider.
“This is a $700,000 asset you’re looking at, and you’re worried about, maybe, $2,500 in custom-closet renovations?”
They looked at each other, smiled, and shook their heads a bit. They admitted that perhaps they were being a bit too picky, and that, yes, they can do some work on the house.
Anything can be changed, whether minor or major.
It’s up to the buyer to decide what they want to take on.
Passing on a house because of the closet organizers is somewhat silly, but passing on a house because it’s filled with mold from head-to-toe is a good reason! Or, maybe it’s not. Maybe to a professional renovator, one man’s mold is another man’s jackpot!
Again – every buyer is different, but the one conclusion I will draw is this: no problem is un-fixable.
Consumer reports, TV shows, and newspaper advice columns will often put the fear of God into today’s home-buyer, but I urge them to research what these “deal-breakers” are before they label them as such.
Knob and tube wiring, for example, isn’t a deal-breaker. Not even close. I just sold a $1,350,000 house that had knob and tube wiring estimated to cost $15,000 to remove, and we got a full-priced offer after two days on the market. Do you think that buyer was scared off by the big, bad buzzword “knob and tube?”
I’m not saying you should buy a house that’s filled with lead pipes, but I am saying that all buyers should do their research on red-flag items.
Let’s take a look at the most common ones:
Knob & Tube Wiring
This is one of the most common “red flag” items you’ll see on watch-lists, and it’s certainly the biggest buzz-word in real estate today. The term comes from the white insulator “knobs” that are used to to keep the wires away from other objects (today’s wiring is stapled to joists), and the ceramic “tubes” that make holes through the wooden floor joists which they’re attached too.
The wiring dates back to pre-1960’s homes, and is usually more common in 60-amp service.
The major safety concern with knob and tube is that there is no ground wire.
There’s a hot wire, which is black, and a neutral wire, which is white, but no ground wire as you’d find in newer wiring like what is used today. These two wires – the black and white, run separately to electrical items, whereas today’s wires contain one plastic sheathing with the black, white, and ground wires all in one.
The hazard concern is threefold:
1) The black and white wires can make contact
2) The insulation around the wiring can break down with age
3) The material insulating the wire is made of asphalt-impregnated cotton, which is highly flammable.
All of these issues can cause fires, which is why the wiring is often replaced.
If you ask a home inspector or electrician, they might tell you that knob and tube wiring isn’t nearly as dangerous as its made out to be. I’ve had dozens of people tell me this over the years, and some home inspectors have referred to the war on knob and tube as a “cash grab” by the insurance companies.
However, if you consider that many insurance companies won’t insure houses with knob and tube wiring, then the idea of a cash grab wouldn’t really make any sense. A couple of companies in Toronto specialize in insuring homes with knob and tube wiring, but the big ones won’t touch it.
Another myth about knob and tube wiring is that it’s incredibly invasive to remove; that you have to tear all your walls apart to replace it. This isn’t true, unless you’re hiring the worst contractor in the city.
Ureaformaldehyde Insulation (UFFI)
My own description of UFFI wouldn’t do it any justice, so here is an excerpt from www.west-end-times.com:
Since the early 80′s urea-formaldehyde foam insulation (UFFI) was banned in Canada and the USA. The Canadian ban is still in place while it is now legal again to sell UFFI in the USA and Europe. Whether it ever was or still is actually a health problem or not, it is still hurting real estate values, even where the stuff has been removed. Now, almost 30 years after it was installed, even if formaldehyde off-gassing was a health problem, there is absolutely no formaldehyde gas left in any walls in Canada today; UFFI is no longer even a potential health hazard. It should also have no detrimental effects on real estate values or even require any special precautions during renovation other than wearing of ordinary dust masks.
UFFI, like many other common household products, contains the ingredient formaldehyde. After UFFI began to be used in insulating and sealing houses in the mid 1970′s, some homeowners reported various health problems. Research was begun on this very common gas, formaldehyde. In high dosages, it was found to cause cancer in rats and mice. Health Canada and the US Environmental Protection Agency (EPA) set maximum acceptable levels for the presence of formaldehyde in homes, and, as a precautionary measure, UFFI was banned.
I’m not a scientist, health inspector, doctor, lawyer, or home inspector; I’m only reporting what I see!
But if you ask Carson/Dunlop, they might tell you that there’s nothing wrong with UFFI.
From their report, found HERE:
“The conclusion to be drawn from all this is that urea formaldehyde foam insulation has not been shown to be a health concern.”
However, UFFI has been prohibited from advertising, sale or importation into Canada under item 34, Part I of Schedule I to the Hazardous Products Act since December 1980. The prohibition includes all urea formaldehyde-based thermal insulation, foamed in place, used to insulate buildings.
There is also concern that UFFI may deteriorate when wet, and can release increased amounts of formaldehyde if installed incorrectly. As well, there is a related concern that the moist foam could support mould growth, which could in turn adversely affect the health of the occupants.
Here’s one red-flag item that I don’t think there’s any debate on.
Asbestos is poison, and while certain types of asbestos are still in use, and while “undisturbed” asbestos in your home may not be harmful, it’s something that has been medically proven to cause serious illness after prolonged inhalation.
Asbestos is a natural mineral – a “silicate” mineral, found in mines, and mined as far back as 4,000 years.
Its use became common-place during the Industrial Revolution of the 1860’s.
From Wikipedia: “By the mid 20th century uses included fire retardant coatings, concrete, bricks, pipes and fireplace cement, heat, fire, and acid resistant gaskets, pipe insulation, ceiling insulation, fireproof drywall, flooring, roofing, lawn furniture, and drywall joint compound.”
You can run a Google search and find equally as many web pages that say, “The response to asbestos in homes is over-blown” as you’ll find advising buyers to look past homes with asbestos issues, however the final decision rests with the home-owner.
I read a study on the Princeton University website that contained the following:
When left intact and undisturbed, asbestos containing materials do not pose a health risk to people working or living in buildings.
But as a home-owner, how do you look past the potential health issues? How do you know if asbestos is disturbed or not?
In my experience, home-buyers will consider homes with asbestos, but they won’t consider living there before the asbestos is removed.
We find far more knob-and-tube wiring in homes as we do aluminum, but both present potential fire hazards, and both are frowned upon by insurance companies.
Copper wiring is today’s standard, but once upon a time, aluminum was used because it was cheaper, and lighter.
Aluminum provides a much better conductivity to weight ratio than copper (I’m not pretending to know what that means; I didn’t take grade-12 physics…), and for a while, it was used as an efficient alternative to copper.
Copper is a commodity, and is subject to price increases and decreases, just like gold, silver, or bushels of corn. So it seems to reason that at some point or another in the past hundred years, users looked for alternatives. And in the 1960’s and 1970’s, it wasn’t uncommon to see entire homes and offices wired with aluminum instead of copper.
But alas, as with knob-and-tube, aluminum wiring is a fire hazard, and while I don’t quite understand the basic theories of Thermal Expansion, you can read all about it HERE. As soon as I saw the drawing of the molecule/atom or whatever the heck it was, I said to myself, “Aluminum – Bad. Understood.” And that was about it.
Another issue with aluminum wiring is that many home-owners have removed some but not all of the wiring, and tried joining and/or combining it with copper. The two metals are dissimilar, and thus they don’t bond well, and can corrode over time.
As with knob-and-tube wiring, there are people out there that will argue, “It’s just a cash-grab by the insurance companies; there’s nothing really wrong with this wiring,” but most home-owners play it safe, and remove the wiring altogether.
The running theme here – with Knob-and-Tube, UFFI, Asbestos, and Aluminum Wiring, is that it’s up to the home-owner to decide what they can live with, and what steps they want to take to remedy any potential issue. Because after all, each of these items presents only potential issues, and nothing is guaranteed. Not every house with knob-and-tube is going to spontaneously combust, but I see massive premiums being paid for all the “flawless” homes in Toronto these days, so why would a home owner not remove a potentially hazardous item, and satisfy the entire buyer pool?