When buying an old home that may still be energized by some (or all) knob and tube wiring, what do you need to know?  What should you do?

By now most home buyers know that insurance companies, as a rule, don’t like knob and tube wiring.  Most will want it removed.  Some will give you a window of time in which to remover.  Still others won’t even entertain the idea of issuing a policy at all.  A few select insurers will still provide coverage depending on specific conditions.

A very common question home buyers are asked by their perspective insurer is about the percentage of knob and tube still present in the house.  This question is a misnomer and not particularly helpful.  It’s also something that’s very difficult to assess.  An example I routinely use when asked this question is:

 If the panel has two knob and tube circuits out of a total of 20, does that mean 10 percent of the circuits are knob and tube?   Technically –yes; practically – rarely.  If those two circuits energize 70 percent of the house, does that mean 70 percent knob and tube?  Perhaps, but what if they’re only energizing general low use/draw branch circuits like lighting and bedroom plugs?

A much more realistic method of describing the amount of knob and tube remaining in a house is through words like “substantially energized” (much or most of the house) or “appears to be minor” (usually one or two general branch circuits).  For a substantially K&T energized house, there should also be an indicator of whether or not the heaviest load circuits, like kitchens and baths, appear to have been updated.

For those insurers that still provide coverage for homes with knob and tube, the issues that are the deciding factors include the size of service, breaker (vs. fuse) panels, and type of circuits energized by the K&T.  Essentially, the heaviest load circuits like the kitchens and baths mentioned above need to be updated/modern for coverage.  This is not to suggest right or wrong; it simply is how the insurers still providing coverage tend to look at it.  There companies will also want the home inspected by either a home inspector on an approved list (people they trust to provide accurate information) or a full electrical inspection by a licensed electrician.

Recently I inspected a tenanted property north of Toronto where I discovered a live uncapped gas line peeking out from behind a small corner cabinet in the living room.  It was the kind of line one usually sees with a stand-alone gas fireplace or similar appliance.  The quarter turn ball valve operating the line was easily accessible to the two small children living in the house.

Because the tenant was present during the inspection, I pointed out this life safety concern to her before leaving.  In conversation, I learned that the landlord has been generally less than helpful when dealing with deficiencies and tenant concerns (the inspection results support her comments).  In fact, she told me that she had a CO/gas alarm in the area that had gone off in the past and the landlord simply told her she had a defective alarm.  I suspected that her ability to deal with either the problem or the landlord would meet with limited success so I told her I would be calling Enbridge to have someone investigate. 

As a professional home inspector, I would say that life safety situations involving natural gas or gas lines don’t occur very often but when they do, I feel duty bound to report the problem.  I can’t imagine how I’d feel (or sleep at night) if someone were to die from a completely preventable situation that I did nothing about.  From past experience I’ve found a call to Enbridge is taken very seriously and will rightly result in swift action by the utility.  Unfortunately, not this time …

Enbridge Fobs Off Life Safety Concern

Immediately following my inspection I called to report the situation to Enbridge on their emergency service number (1-866-763-5427).  The woman who answered took all the relevant information but, when I was unable to report an immediate smell of gas, she put me on hold only to come back and say it wasn’t their problem and there was nothing she could do about it.  I was gobsmacked!

I was so ticked-off with Enbridge’s cavalier attitude under the circumstances that I went back to the house and strongly hinted to the tenant that she should call Enbridge herself and report perhaps a faint smell of gas from the area.

Enbridge Take Two 

Uneasy about leaving something as important as this in the hands of a tenant (or even an owner quite frankly), I followed up with another call to Enbridge about four hours later.  This time I reached someone who did recognize the significance and potential ramifications of the situation.  After transferring me off their emergency line, he came back on to discuss the problem and how they might proceed.  Note: The tenant hadn’t called and the guy at Enbridge told me that there had been other gas safety related problems at this address in the past.

Strictly speaking, unless there is a smell of gas or a CO alarm is sounding, Enbridge doesn’t have the authority to deal with problems within the actual home.  He very politely explained that the only way to force their hand would be to report a possible smell of gas (hint, hint, nudge, nudge, wink, wink).  Of course, at that moment, I couldn’t quite recall what it was that I smelled but it certainly could have been gas.  Yes, now that I’m thinking about it, I’m pretty sure that’s what it was ….

Special Thanks to a “Guy at Enbridge”

Even though I know his name, I’m using “guy at Enbridge” because I don’t want to take a chance of getting someone good – someone who cares – into trouble. Although I think he should be given a citation for recognizing the potential significance of this problem and not just sloughing it off by saying it’s someone else’s concern, I’m not so sure Enbridge would agree.  So thank you, “guy at Enbridge”.  Thank you for taking the initiative to make sure everyone stays safe and no one might die over a stupid thing like a missing cap on a live gas line.  I know I’ll sleep better tonight.

So from now on, I guess I’ll have to answer to any future life safety concerns, at least where it comes to Enbridge, with “Yes, I’m pretty sure I can smell gas.”

How do you find a properly qualified home inspector?  One would think this should be easy – after all, how difficult could it be with so many guys out there calling themselves home inspectors? 

Unfortunately, a big problem that many home buyers aren’t even aware of is that the home inspection industry in Ontario (and most of Canada) is a completely unregulated one.  This means that anyone can and most simply do just call themselves a “home inspector”.  Beware of on-line inspector mills and made-up designations many wannabe home inspectors use to lend an air of legitimacy to what they do.  For example, Certified Home Inspector is not a provincially recognized designation – but it sure sounds good!

Try to Get Referrals

Many home buyers rely on agent referrals to find them a home inspector.  And if you know your agent well and trust that person to have your best interest at heart, this is probably the best way for you to get someone who knows what they’re doing.  Many agents will provide their clients with three cards and let them choose.  This provides a small degree of arms length to the decision but you still don’t know if the three names you’ve been given are any good.  The best time to start looking for a home inspector is before you even make the offer.

Specialized knowledge, training, and communication skills are essential for any home inspector to be effective in finding and imparting the information you need to know.

The time to ask for those referrals is right when you begin working with an agent in the search for your perfect home.  This gives you an opportunity to do your own due diligence.  Be sure to ask friends, relatives, and colleagues who may have recently purchased a home who they used and if they were happy with the inspector.  Call the different inspectors you’ve been given and ask some pertinent questions.  If you’re not happy with the answers, go to an established and recognized home inspection association where you can search for qualified inspectors.  Two such associations, where you can quantify an inspectors credentials, are the Professional Home & Property Inspectors of Canada (PHPIC.ca) and the Ontario Association of Home Inspectors (OAHI.com).  

An Unregulated Industry

A reputable home inspector will have extensive training and experience as well as belong to one or both of the recognized industry associations noted above.  It stands to reason then that those with no formal training and limited experience are less than qualified to help consumers with the biggest purchase decision of their lives.  Specialized knowledge, training, and communication skills are essential for any home inspector to be effective in finding and imparting the information you need to know. 

Things to Look For

Recognized designations include National Certificate Holder (NCH) which is soon to become National Home Inspector (NHI), Registered Home Inspector (RHI), and Professional Home and Property Inspector (PHPI).  Inspectors with one or more of these designations tend to be industry leaders.  These are the inspectors with quantifiable credentials, experience, and training. 

Being a member of PHPIC and/or OAHI also means strict adherence to a code of conduct, following an industry recognized standard of practice, and keeping abreast of what you need to know through ongoing professional development.  A professional/reputable home inspector will also work full time as a home inspector and should be properly insured for errors and omissions.  A typical home inspection should take about 30 to 40 minutes of outside time plus another three hours inside and cost around $450 to $500 for the average house.

Less than qualified inspectors are frequently part-time, typically charge less and finish in less time.  They rarely, if ever, attend industry functions and training.  They may or may not have some basic courses.  Their prices also tend to fluctuate with each inspection (depending on how busy they are and what they think they can get).  They may not get on roofs or open electrical panels – in fact, some experienced inspectors won’t do these things either so be sure to ask.

What You Can Do

First, figure out what’s most important to you: the best inspection or the best price – you really can’t have both.  Assuming you want the best inspection, insist on only a qualified home inspector.  Make sure your real estate agent knows you don’t want to compromise on the home inspection and then do your due diligence.  Get the word out by telling everyone you know who may be buying a house that they need to be careful with who they hire to inspect it.  Finally, join our petition and let the Ontario government know that you want better consumer protection when it comes to buying a home.

In part one of Reno-to-Flip Homes I talked about the open house. Part two focused on the cosmetics of the renovation; that is, the things that typically attract homebuyers to these houses in the first place – mostly shiny new kitchens and baths, some new flooring, freshly painted walls and lots of potlights. With the huge increase in reno-to-flip houses on the market this spring, be sure to read parts one and two of this blog series for suggestions on how to spot the shortcomings often found in bad flips and how to protect yourself from those flogging them.

Generally speaking, if the house doesn’t really cut it at the cosmetics stage (obvious signs of amateur work/installation or cheap material) you can be pretty sure it will really suck on the mechanics side.

In this final segment on Reno-to-Flip homes, we move on to the things most homebuyers usually can’t see or really wouldn’t know what to look for – the things that hold the house up, keep the water out, and make everything work (major mechanics and systems like heating, cooling, plumbing, and electrical).

Generally speaking, if the house doesn’t really cut it at the cosmetics stage (obvious signs of amateur work/installation or cheap material) you can be pretty sure it will really suck on the mechanics side. Unfortunately, the opposite is not always true – well done cosmetics does not necessarily translate into well done mechanics.

Top $$$

Usually the biggest (read most expensive) mechanical problems involve plumbing (particularly on the drainage side) and electrical deficiencies. These take the form of either old and frequently uninsurable wiring or downright dangerous amateur modifications, or both. Old, tired roofing – often flat roofs or areas not readily visible from grade – make up another big expense area common to bad renos.

Structural Modifications

What about structural modifications? These are usually the most difficult to spot and really require a high degree of knowledge and experience to identify. The most common structural change in older housing stock is the open concept first floor. Everyone wants the feel of large open spaces and, while doable, in bad reno-to-flips it’s often done poorly or wrong. Improper wall removal often leaves over-spanned joists that can lead to bouncy floors and cracked tiles down the road. Unusual sag or slope of floors (usually the second floor) can mean crucial support framing has been removed.

Improper basement underpinning (when floors are lowered) is another common structural concern that is very difficult to identify unless there are other structural ramifications stemming from it.

You’ll likely not know about these things until you’ve moved in if your inspector missed them (or if you dropped your home inspection condition from the offer).

Permits

With few exceptions, all of the items noted so far (except roofing) require permits to undertake. It’s been my experience that most reno-to-flips, good or bad, don’t have permits issued for the work done. That said, if permits were issued and are available you’re more likely to be in one of the better reno-to-flips.

HVAC

I’m least worried about old furnaces and air conditioners. Although a sign of a reno shortcut, these items are relatively easy to replace and for a reasonable amount of money.

Final Thoughts ..

The calibre of reno-to-flip houses on the market right now is generally so poor that it may be more accurate to use the term “reno-to-flop” instead. The bottom line is that most people really need a properly qualified home inspector to point out these concerns before they buy what may not only be a money pit but an unsafe place to live.

Unfortunately, many buyers continue to gamble with their hard-earned money. This is often because, in multiple offer situations common to the reno-to-flip market, they ‘re not willing to pay for an inspection on a house they might not even get. So what if you get the house? The real question should be, “Can you afford not to have an inspection?”

Now here’s the rub, How do you find a properly qualified home inspector? Stay tuned – that’s a topic for another blog.

The Complete Reno-to-flip Homes Series

• Reno-to-Flip Homes, Part One – The Open House
• Reno-to-Flip Homes, Part Two – The Cosmetics: Sizzle or fizzle?
• Reno-to-Flip Homes, Part Three – The Mechanics

What the heck is going on this year? In my 10 years as a home inspector, I’ve never seen so many “reno-to-flip” disasters on the market as I have seen this spring. If you’re buying a home that falls into the reno-to-flip category, you’ll have to use extra caution to ensure you’re not getting a prettied-up money pit.

The spring real estate market, traditionally the busiest of the year, sees an upswing in homes purchased in hot or trendy areas with the express purpose of renovating to resell for a profit. Perhaps it’s the preponderance of DIY and home renovation shows on TV that has lead to everyone and their uncle thinking they’re contractors or renovators. THEY’RE NOT!

What We All Want

It’s perfectly normal to want a house that’s been renovated, modern looking, and in move-in condition. Few want old, worn, and tired houses they may have to update right away just to suit their needs or to get insurance. The problem home buyers often encounter when buying reno-to-flip homes is that the finishes look great but the mechanics (and sometimes even the structure) of the house are in terrible condition.

It’s really very easy to spot a reno-to-flip – even the good ones – and your real estate agent should be able to quickly verify it for you by simply checking the sale history/activity of the house. Unfortunately, what’s much more difficult is spotting the bad ones (and then trying to determine just how “bad” bad really is).

Checklist

The very first thing to do is start with what you like best about the house. Do your darnedest to set aside your emotional attachment to the house and look at those finishes you love so much very carefully and closely. Does it really look like quality material was used? Pay particular attention to the items that really sell like kitchen cabinets and counters and bathroom fixtures and fittings.

The sad thing is, better quality materials really aren’t that much more expensive. Those that do use better materials are generally interested in providing a better product.

A quick trip to any major DIY store will prepare you to spot the difference between low-end kitchen cabinets and kitchen and bath plumbing fixtures from the better quality products. Those just interested in making the house look pretty to sell almost always buy the cheapest materials. This should be your first clue that all may not be as it seems. The sad thing is, better quality materials really aren’t that much more expensive. Those that do use better materials are generally interested in providing a better product.

Next you should look at the installation of these fixtures and finishes. How straight and square are those nice new cabinets? Granite countertops are pretty much a given today. How do the seams look? Did they choose the really thin stuff or are the counters full thickness? Pay particular attention to tile installation in both the kitchen and baths; not hard to do well but many screw this up. Misaligned tiles, bad end cuts, or cuts around protrusions like faucets and taps that are poorly done are indicative of amateur/poor workmanship.

What about lighting? Potlights are a must-have these days but can be easily screwed up – particularly in areas where you should expect insulation in the ceiling above (a good home inspector should be able to identify these serious fire-safety issues). How many outlets are in a room? A single outlet in bedrooms is woefully inadequate. It’s also one indicator that old and quite possibly uninsurable wiring may still be present. Are there GFCI protected outlets (those plugs with the two little buttons on them) anywhere near water (kitchens, baths, and outdoors)? What about smoke alarms? One on every floor is the law (and common sense). In a well renovated house, these will be hard-wired alarms.

The calling card of the reno-to-flip gang is to focus only on what sells: good looking kitchen and baths, new flooring and a lick of paint but ignore other expensive stuff like old/tired windows and doors. Original wood or sashless windows or old (generally crappy) metal fixed and sliding windows are expensive to replace and are therefore often ignored.

This is just a partial list of the really obvious signs of a poor reno-to-flip; the stuff that a home buyer, with only a bit of preparation, should be able to spot on his or her own. You just have to remember to look with a critical eye and to make sure you do your best to take emotion out of the equation.

Next time, in Part Three of Reno-to-Flip homes, I’ll talk about the really scary stuff – the screwed-up mechanics and the structural compromises that are most common in badly renovated homes.

The Complete Reno-to-Flip Homes Series

• Reno-to-Flip Homes, Part One – The Open House
• Reno-to-Flip Homes, Part Two – The Cosmetics: Sizzle or fizzle?
• Reno-to-Flip Homes, Part Three – The Mechanics

This particular blog post started out as a simple expression of my frustration as a professional home inspector continually coming across bad reno-to-flip homes being unleashed on a largely unsuspecting home buying market. However, it quickly morphed into a multi-part topic designed to help home buyers recognize and avoid these problematic homes that are frequently money pits and sometimes even unsafe to live in.

Unfortunately, it’s been my experience that “fully renovated” or “completely updated” are loose terms that are usually interpreted very differently between buyers and sellers.

The Hook

For the home buyer, the bad reno-to-flip often starts with an open house. A big part of house hunting is to cruise desirable neighbourhoods or scour the MLS system looking for open houses in the areas one finds most appealing. Before walking into any open house, I urge everyone to first start a relationship with a real estate agent they are comfortable with and can trust. I’m not a fan of long-term agency agreements that lock you into working with someone beyond a few weeks or maybe a month but an agreement of some kind should be expected.

The Agents

When you agree to work with an agent, you give him or her assurance that you’re serious about buying and gets the ball rolling with them actively working on your behalf. The other advantage is that when you walk into an open house, without your agent present, you can let the listing agent know that you’re already working with someone and will bring them into the picture if you like what you see. Otherwise, you may find yourself stuck working with an agent who is already acting on behalf of the seller. Note: Some people think an arrangement like this could offer them savings on the purchase price or with commissions the seller pays. Do your homework – this is rarely the case.

The Dazzle

So now you’re in the house, possibly what may be the house of your dreams, all new and shiny with a great kitchen, sexy bathrooms, beautiful hardwood or new carpet, freshly painted walls and ceilings, and on and on and on. The open house agent begins by selling you the sizzle. You’ll commonly hear how the house has been “fully renovated” and that “everything is new” – there’s nothing to do but move in and enjoy your “new” home. Pride of ownership abounds!

Unfortunately, it’s been my experience that “fully renovated” or “completely updated” are loose terms that are usually interpreted very differently between buyers and sellers. Yes, some things have certainly been done but few buyers stop to think about how well done these things are or what hasn’t been done yet – and the flippers are counting on you buying before you even think to ask.

Although very difficult when buying a house, this is the time to really try to take emotion out of the equation and look at the house as impartially – and indeed critically – as possible. Having a friend or relative who won’t be living there often helps; just be sure they’re not afraid to be honest with you.

So Far, So Good

If everything has gone well up to this point, it’s time to bring your own agent into the picture. If you all agree that this house may be the one and is worth pursuing, now is the time to have the house looked at professionally by a qualified home inspector. If it looks like yours is the only offer, make the inspection conditional in the agreement to purchase. If you even think there’s going to be multiple offers, a pre-offer inspection is a small price to pay to help you separate the good from the bad. If the vendor/listing agent won’t allow a pre-offer inspection, this should be a major red flag for you. Pre-list inspections usually available on-site are often inaccurate or incomplete. Remember, these are generally done for the vendor’s benefit and not yours; an honest pre-list report will be balanced.

Stand Your Ground

Finally, it’s extremely important not to let the listing agent present at the open house in any way bully you or try to pressure you to act immediately. Do not let time constraints force you into decisions without first crossing your T’s and dotting your I’s. This is usually easier if your own agent is with you at the open house but that’s not normally the case. (As a sidebar, if you feel like your own agent is trying to bully you, you’ve likely picked the wrong agent and you’ll need to get guidance from another source on how to protect your interests.)

Next time, in Part Two of Reno-to-Flip Homes – The Cosmetics: Does the house sizzle or fizzle?

The Complete Reno-to-flip Homes Series

• Reno-to-Flip Homes, Part One – The Open House
• Reno-to-Flip Homes, Part Two – The Cosmetics: Sizzle or fizzle?
• Reno-to-Flip Homes, Part Three – The Mechanics