When you have been around as many real estate transactions as I have, you begin to anticipate the possible challenge points in a transaction. This is one of the reasons you hire an experienced professional, isn’t it? Anyway, when I have a buyer interested in a house which was built in the early 1970’s my thoughts immediately turn to aluminum wiring. 
During the 1970’s aluminum wiring was extensively used instead of copper in many houses. Since that time aluminum wiring has been blamed for many house fires. But don’t panic if your house has aluminum wiring. Aluminum wiring, when properly installed, can be just as safe as copper. Aluminum wiring is, however, very unforgiving of improper installation. It is at the connections where the latent danger can linger.
When purchasing a home that was built in the early 1970’s make sure your inspector checks for the presence of aluminum wiring. If it is present, the inspector should check each receptacle to see if there is any loosening or signs of overheating. What happens to the wire over time is a gradual loosening of the connection which causes oxidation and overheating. If the connection becomes very loose the electrical current can arch and spark. Most homes never reach this stage.
Once the presence of aluminum wiring is established it is important to know that in most cases it is not an immediate hazard. It has been functioning for over 30 years and caution going forward is advised but it is not a reason to run the other way. The wiring can be fixed without tearing apart the walls.
Solutions:
- The traditional fix for aluminum wiring was to pigtail (attach) a small portion of copper wire to the end of the aluminum wiring and then attach the copper to the receptacle. This has worked well but some feel that the connection between the aluminum and the copper can come loose over time.
- Another more recent (and more expensive) solution is a crimping method. It is the same idea but it uses a special tool that fuses the copper to the aluminum wiring permanently.
My inspection philosophy is that it is a time where the buyer gathers as much information about the house as possible so that they know what to expect in the future. It is not a time to use every minor ding to re-open price negotiations, it is a time to identify the major safety and maintenance issues and come to a win-win solution with the seller. It is everyone’s goal for the sale to go through and the inspection can be handled in such a way that the buyer get’s a good house and the seller pays what is fair.
Here are a few links with detailed information on aluminum wiring.
http://www.inspect-ny.com/aluminum/aluminum.htm
Hello Neil, came across your website on search for energy tax credits colorado — your website must be well designed with proper word matches, since your site listing comes up in several different searches ! II run Masterwork Plumbing and Heating, Inc. in Summit County CO — I am consulting with local web designer to create my own website, but that will take a little more work on my part. re: Aluminum wiring — my home built in 1979 has aluminum wiring. I’ve done a number of significant improvements over the years since buying in 1992, including abandoning electric baseboard heating and installing boiler with hydronic baseboard heaters (that is, hot water heat). I’ve replaced all original switches and power outlets. Thus I’ve dealt with aluminum/copper connections — connections to power receptacles and switches require COPPER wire pigtails to aluminum wires. These connections are subject to arcing and heating problems described in your web links. The problem isn’t only that loose connections cause problems, it’s also the dissimilar metals — copper/aluminum connections result in oxidation of both metals, mostly of the aluminum; this creates resistance to flow of electric current, and resistance creates HEAT — bad news indeed. I used an ANTI-OXIIDANT COMPOUND — a thick grease-type substance sold in small tubes — in wire nut and smeared over both copper and aluminum AND on aluminum/aluminum connections.I deal with this issue when replacing electric water heaters in homes with higher-gauge aluminum stranded wires 10 or 8 ga. usually, which can be problematic because of large size compared to smaller solid copper wire. Elecricians advised this, and believe they still advise using anti-oxidant grease. There are probably wire alloy pigtails that reduce the chemical reactions between copper aluminum, but this may not eliminate the problem. I don’t think home owners should be doing electrical work without first consulting a LICENSED electrician, especially if they have aluminum wiring !! Thought I’d give you a heads up on this subject.