Inspectors - please comment! What's going on here?

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Real Estate Agent with Realty World Alliance

What the heck could it mean that this is discolored and the wire insulation is burnt off?  What could do that and how do you repair this??

 Inspectors and repair-folks - please comment.  Haven't run into this before and looking to learn!

Main disconnect

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Rainmaker
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Joel Weihe

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