Old and historic are not the same thing. A building (much more rarely, a landscape) doesn’t need to be very old to be historic, with the cutoff for historic consideration generally fifty years—though occasionally younger resources than that are given local landmark status. There are also many old buildings that are not considered historic.
For a resource to be considered historic, either (a) an important event happened there; (b) an important person lived there for a substantial period while they were doing the thing that made them important; (c) it embodies a type, period, or method of construction (usually a style of architecture), is an important work by a master architect, or has high artistic values; or (d) it has the potential to provide important information (usually invoked for archaeological sites, almost never for buildings).
It is extremely rare for a historically important event to have happened in a building, particularly a house or commercial building. (I have only dealt with one: the campaign to establish a County Commission on the Status of Women, an important event in San Luis Obispo’s Second Wave Feminism, run out of a century-old private adobe.)
Historically important occupants are a bit less rare, generally defined as a civic or political leader, the leader of a group or profession, or someone who made important discoveries or artistic works or founded or advanced an industry. I’ve dealt with a number of those, including an early county coroner and city clerk; leader of a vigilante movement who was later a county JP and first city police court judge; an early woman union leader; a pioneering woman journalist, political, and civic leader; and the first African Americans in the city to own the physical property of their business.
The most common reason for historic significance is embodiment of an architectural style, generally defined as having the form, decorative details, and materials characteristic of a particular style.
However, for a building to be historic that embodies an architectural style, it also has to have enough of its original appearance to communicate that significance. Extensive loss of design, workmanship, materials, and setting all impact that communication.
The time for an HRE is usually when an owner is considering work that might considerably alter a building or even demolish it, or when an owner would like to give their building landmark status, whether from wanting to preserve it, receive the prestige of a historic listing, or receive the considerable tax advantages that can come with a historic listing in California. If, at time of purchase, you’re considering either major alterations or property tax abatement, that’s the time to ask your real estate agent whether the property is historically listed and ask an architectural historian whether it has the potential to be listed.