Severity of electrical defect?

No.
And certainly not in red ink.
I’ll note the two wire circuits, and probably recommend a whole house surge protector be installed at the main.
The pictured panel looks super neat, and professionally done.

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What did your tester show at the receptacles? Grounded, or ungrounded?

Some receptacles were grounded, some ungrounded, and also two prong receptacles throughout home.

Welp, all you can do is call out what you see. I come across 3-prong open ground receptacles on 1/2 of my inspections and put them in the report every time.

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After reading your post(s) I understand where the agents are coming from. Many of the items you listed as defects were acceptable when they were installed (at time of construction). You can’t report them as defects and in need of replacement just because they do not meet modern standards.

Though there’s nothing wrong with recommending an upgrade, such as with 2-prong receptacles.

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So are you saying that if I find something that was original to the house, although it’s not up to today’s standards, I shouldn’t mark it up because it was correct when they originally installed it? I know somethings can be grandfathered in but thought we still mark up somethings (especially electrical not up to today’s standards). Where do you draw that line on what to accept because of when it might have originally been installed and when not to accept it?

You can note your concerns that the system does not meet modern safety standards, but it’s not a defect per say.

This is what I do. I describe what I see, I acknowledge the system is old and does not meet modern safety standards and recommend the client consider upgrading the system for additional safety. I do not mark it as a defect

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You might not realize all that you are asking but there is A TON here that is really the core of what HIs do. The main “bar” you are there to verify is the part of the SOPs that goes something like this: “Verify that a given system or item is performing as intended accounting for age and normal wear and tear.” This basically means that EVERYTHING is “grandfathered”. Trying to pick and choose things is an endless road. So, the part of your post that says, “I know somethings can be grandfathered in but thought we still mark up somethings” makes me think you’re not too clear on this. I’m not trying to give you a hard time at all. I’d recommend you start by reading… REALLY reading over the SOPs in your area or I-Nachi or whatever ones you can get your hands on.

On the surface electrical is no different than the roof or siding. It just gets more focus from most HIs because it’s “exciting”. As in, no one usually dies when their plumbing leaks. There are inspectors in here with decades of experience and we all struggle with the question of “what to all out” daily so you’re not alone. The best thing you can do is exactly what you are doing here - asking questions and finding the sweet spot between informing, reporting and scaring people. There are instances where each are necessary.

Don’t let the agents dictate much of what you do but they can be a useful tool which it sounds like you are learning. If you hear the same thing from several it’s probably worth looking into. You well may find that they are all just being a PITA but you also may find you are off a bit on your reporting.

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Thanks for the clarification, besides being some of the ugliest hack work we’ve seen on this forum in quite some time that panel feeder does not have an equipment grounding conductor (EGC). An EGC is required and the sub-panel feeder needs to be four conductors not three as shown in the photo. 2-wire branch circuits were likely permitted at the time of installation. 2-wire circuits with 2 prong receptacles or GFCI protected 3 prong receptacles are still permitted by the NEC.

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Very well put!

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So Robert, are you saying although this system is older and probably didn’t have a EGC to begin with, it’s still technically a defect and should be reported?

Correct. A sub-panel has always required a separate EGC in the feeder unless it was in a separate structure and it was prior to the 2008 NEC. Looks like the sub-panel in the photo in post #19 also is lacking an EGC in the feeder. At least there they installed the green screw to bond the metal enclosure to the neutral. Not code compliant but better than leaving the entire panel enclosure ungrounded.

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So if the panel was installed prior to 2008 (which it was) it wouldn’t be considered a defect for not having an EGC Correct?

Is it in the same structure? If yes then the feeder is a defect because it lacks the required EGC.