10 real estate deal-killers (and how to handle them)

This article was last updated May 3, 2023.

Real estate is wrought with deal-killers at every turn. Sometimes, no matter how proactive you are, surprise rears its ugly head and throws a wrench in the entire transaction.

Whether you’re an experienced agent who’s been there and done that or you’re new to the biz and just trying to figure it all out, a savvy agent will have — or creatively find — a plan B. Here are 10 home-sale killers and how to deal with them.

1. Mold

This four letter-word sends the most hardened of buyers running for the hills. The mere thought of finding this substance can be downright scary, even if it is not black mold. Determining the source and cause is key because if the diagnosis is not accurate, the problem can never be addressed.

Deploying a tech-savvy, seasoned and credible home inspector who knows how to intelligently use an infrared camera and has a lot of in-the-trenches experience might be a good person to start digging into the problem.

Once a cause has been determined, testing of the mold might need to be done. Remediation and/or repairs will need to be handled, but depending on the extent of what is needed, the existing buyer might not feel comfortable moving forward, no matter how much assurance all will get corrected.

In any case, repairs need to be done with follow-up testing (if applicable) and disclosures made along with all documentation showing inspection reports, investigations and repairs by appropriately licensed contractors.

However, if the problem stems from a construction defect in a newer home or from some remodeling where contractors were involved, this will be a much more complicated problem to solve as far as who is liable in the chain of events, and the house might need to come off the market.

2. Cigarette smoke

Besides mold, the strong smell of cigarette smoke sends buyers quickly out the front door. They might not even go past the foyer after taking in the smell, and no amount of encouraging them to ignore it is much help.

Smoke is always a huge turnoff. Unfortunately, there is no easy solution for this one. If the home is not occupied, it is much easier to deal with versus if lived in by the inhabitants who smoke.

Depending on the situation, if the home is occupied, having a frank conversation with those living there that all smoking inside the home has to stop — immediately — can help. Any smoking needs to be outside and away from the home, not by the front or back doors, porch, etc.

Remediation needs to be tackled on some level to make showings more palatable.

This could mean:

• Bringing in ozone machines
• Having the HVAC system, coils and ducts cleaned with an odor-absorbing treatment (might take multiple treatments to really take effect )
• Removing all vent covers and having them cleaned to remove any nicotine residue
• Removing existing window treatments and having those washed and professionally treated (or possibly replaced, depending on the severity of the smell)
• Washing walls and doors
• Repainting and removing or replacing any carpet and padding

Any tile floors and grout in the kitchen, living and dining areas should also be professionally cleaned. And don’t forget to throw out any front or rear doormats that could be holding a smell.

Much of this is easier to address if the home is empty. There may be varying degrees of “buy-in” from the seller on doing some or all of this due to the cost and inconvenience (if still living in home) involved.

Often, a significant price reduction needs to be made to account for the stigma as the smell might linger in the backdrop. No matter how much is done, it can be difficult to find a buyer who is willing to take on a home that had smokers, unless it is in a very hot market where inventory is low.

3. Aluminum wiring

This is another issue that is prevalent in older homes that many people don’t seem to be thinking about until the inspection happens. Don’t be fooled by the beautiful renovations and even the newer electrical panel.

The listing might tout that it has a newer roof, plumbing, HVAC and so forth, but if the wiring has never been replaced, this might be a dead deal.

It seems to be an issue where many sellers kick the can down the road to the next owner because it was like that when they bought the house and they haven’t had any issues.

Unfortunately, in this day in age, it will be a problem for the next buyer. It can be difficult to obtain insurance, and it might be more costly because of it. Rewiring a home doesn’t just involve running new wiring, but also likely having to cut holes into the walls, therefore, additional drywall work is going to be involved to patch and repair everything.

In addition to drywall repair work, now walls and entire rooms might need repainting as well as ceilings. This repair has a contagion effect on many areas of the home, and it’s not a quick fix.

For this reason, sellers might not want to tackle this in the middle of a transaction. It might be better for the seller and buyer to obtain their own estimates on handling in its entirety and average the two or work out a suitable credit toward closing costs, pre-paids or a price reduction to account for the repair with the caveat that the buyer can obtain insurance to close, of course.

4. Foundation issues

There is nothing more disappointing then finding out that what seemed like “the perfect house” is settling, shifting or potentially sinking. The mere idea of foundation issues tends to scare buyers and their agents off (unless foundation problems are a relatively common finding in a particular area and are to be expected due to the terrain).

Depending on the cause of the issues, there could be concern about the same things happening again, even if repairs are made.

Ironically, I encountered this problem in my third transaction in the business. This was a home that had a multitude of issues including needing a new roof, low water pressure (which was resolved by a relatively simple fix to the well’s motor) and, last but not least, foundation issues were discovered as a result of sandy soil and no gutters.

Despite being so green to real estate myself, I did not think this was a house anyone would want to buy after the inspector got done with it. I was fully prepared, and I almost encouraged the buyer to find something else as encountering a home with this many issues at once was pretty rare, at least according to what I was told by the seasoned veterans in my office.

Nevertheless, these buyers wanted the house. The seller was a young guy who had moved out of state and rented the house out for a few years. He was completely blindsided by the findings.

After much back-and-forth negotiation about the repairs for over two weeks, the seller agreed to have the foundation repaired along with replacing the roof. The cost was several thousand dollars, and I remember a foundation contractor had to install helical piers around the house.

The seller also had to have a new roof put on as that was also noted by the appraiser as well as the home inspector. Nevertheless, there is no easy solution here — the seller might have to make the repairs or significantly reduce the price to account for the issue and find a buyer willing to take this situation on.

Even if the seller wishes to sell “as-is,” buyers perceive this kind of disclosure as a red flag. There is trepidation for taking on something that they might not fully understand the magnitude of until they get into the repairs, and what if the cost far exceeds the estimates provided by the seller?

5. Unpermitted structures

So, the due diligence period reveals that a fireplace wasn’t permitted or a bathroom or addition were added without permits being pulled. The gauntlet comes down, and that uneasy feeling in the pit of your stomach creeps in.

Suddenly, the home that seemed to check all the boxes reveals its not so good side. The buyer starts to doubt the value of what they agreed to pay, and this touches on a myriad of issues. An appraiser will not be able to give value to any unpermitted structures in the home.

Besides a surface-level inspection, how do you really know that the area in question was built properly and is structurally and operationally safe? What about obtaining insurance?

Unfortunately, there is no amnesty day for unpermitted structures. Calls to the local building department must be navigated delicately and could set off an investigation with possible fines levied against the seller.

A building inspector isn’t going to simply go out and put his or her seal of approval on something like this, even if it visually appears to be OK. Inspectors will want walls opened up and structures likely torn apart to inspect.

A general contractor in good standing might need to come in and oversee any corrective work.  The building inspector could require a bathroom to be redone to meet codes. Thus, a can of worms has been opened up. The buyer wants no part of it, the seller doesn’t want to deal with it but has to disclose, and the municipality now knows about it.

Whether or not the seller or someone before them did this, the seller almost has no option but to work to legitimize the area in question or remove it entirely if that is the easier way to go.  The home will likely have to be taken off the market while all this is sorted out. The chances of finding a cash buyer who doesn’t care about any of this is slim as they still have to obtain insurance on the property.

6. Collapsing septic tanks

It always amazes me how the condition of a septic tank is conveniently left blank on many a sellers’ property disclosure. When was the last time it was cleaned out? No one knows or could possibly remember.

The sellers don’t think they had it done, and they are pretty sure it wasn’t done when they bought the house, but as far as they know, they’ve never had a problem. The septic inspection reveals all sorts of problems, and the tank is on the verge of collapsing.

Unfortunately, the only option is to replace the tank or connect to the public sewer if the option exists. It is expensive, and it’s going to be messy, but there is no other choice.

Nevertheless, a buyer is not going to likely want to take this project on after closing either way — there are too many unknowns, and it’s quite costly.

7. Structures encroaching on neighboring property line

On my second transaction in real estate, I learned all about this one. I was working with a first-time homebuyer who was buying an older home.  The most appealing part of the property for him was the large detached garage.

We were sailing through the transaction just fine, until the survey was ordered and came in a couple of days prior to closing (as was customary in my market).

Boom! The survey revealed that the garage encroached on the neighbor’s property line. Both properties had been owned by the original owners, and this was the first time the home I was selling was changing hands.

The property was an estate, and it was being handled by an attorney who was surprised to learn this information as well. Unfortunately, the only option would have been to literally chop the garage in half to put it within the home’s property lines.

Needless to say, this transaction did not close, and I was  on my way to becoming more “experienced,” having had one sale fall apart early on.

To prevent this issue, if there is not a recent copy of a survey available, request a new one be completed early in the transaction process.

If the survey is typically a seller closing cost and the seller does not want to pay for one until closer to closing, the buyer should have one ordered upfront and negotiate with the seller to credit them with the cost on the closing statement.

This way, if an issue is found, there will be time to work on correcting it, renegotiating, or if parties cannot move forward due to something more serious, at least this piece of information was not discovered as the seller’s moving truck was pulling up to pack up the house.

8. Little to no equity in the property

The seller bought at the height of the market, and the price significantly dropped in value during the market crash due to a plethora of short sales and foreclosures in the neighborhood.

Despite the passage of time, the property has still not recouped its value from when it was purchased, and perhaps the seller had to refinance at some point, which leaves little equity.

Therefore, margins are tight and comparable sales are so-so. Selling the home at a price high enough to pay off the mortgage and closing costs and being able to break even is going to be tough.

The seller doesn’t have or is unwilling to bring money to the table to close, yet there really is no other option. They don’t have a tangible hardship in the eyes of a bank, so a short sale would not be a solution. The potential deficit of money they would have to bring is large enough to be a struggle for many people, but not enough that a bank would be willing to mitigate without going through a long and circular battle, embroiled in a sea of paperwork with no guarantees.

Perhaps the seller stayed in the home 10-plus years, hoping values increased and putting plans on hold, or they rented out the home because they moved out of the area. To make matters worse, critical systems in the house are now that much older, so there is a roof nearing replacement as well as the HVAC and water heater.

To make matters more challenging, the buyer audience for the home will likely be first-time homebuyers and might need closing-cost assistance.

To avoid this headache, provide a detailed overview of all closing costs associated with selling as well as those that could potentially arise — such as a buyer asking for a home warranty, a closing cost concession as well as potential repairs.

Make sure to account for any association dues, estoppel fees or other costs associated with change of ownership. Reach out to the title or attorney’s office who will be handling the closing, and ask for an estimate reflecting their exact charges based on a hypothetical but realistic closing date.

Have the sellers find out what their loan balance is now as well and what it could be projected to be by the time the home closes based on normal marketing times. The seller might want to consider obtaining a pre-listing inspection to get a handle on any repair issues so they can get an idea of costs and figure out what they are willing or not willing to do.

From there, a realistic strategy can be fleshed out on the best way to sell the house. If margins are so tight that the seller is not going to be able to cover closing costs, it is best to be upfront with that information.

The same also goes for repairs — sellers should be clear upfront about what they can and can’t do so expectations are properly managed with a buyer. All of this has to be balanced against market realities and who the realistic buyer audience is for the home.

9. Buyer with inadequate funds

Speaking of first-time homebuyers, buyers with little funds available for a down payment and closing costs can be difficult to match with a suitable property. The lack of affordability and tight inventory make it much more difficult as multiple offers are the norm rather than the exception.

The sellers often selling these properties were first-time homebuyers themselves, and they may not have that much equity in the property when all is said and done. A seller who is able to accommodate a closing cost concession might not want to address much in the way of repairs or financially deal with anything else that may come up.

Therefore, if an unexpected wrench gets thrown into the deal, it often becomes the transaction of “give,” and it’s up to the agents to save the deal by calling in favors from service providers, asking for significant discounts and sometimes having to contribute hard-earned commission dollars to solve the problem and get the transaction closed.

10. Difficult people

At the end of the day, most problems in real estate can be solved, but it is the people involved who make them difficult or next to impossible to work out.

It could be a combination of the agents as well as the buyer and seller. Agents could overstep their bounds imparting bad or inaccurate advice, which can have an adverse effect on the outcome.

A buyer could have unrealistic expectations of what a seller should do, and a seller might be disconnected from the realities of their home’s condition, the cost to repair the items or the fact that they must be done to move through a transaction with any buyer.

Sellers might have been misled by an agent as to their home’s value or what they needed to do before going on the market. When the reality of real estate does not match up to pie-in-the-sky expectations, multiple offers and people trying to climb over one another to buy the house, disappointment and frustration ensues, and the deal falls apart for everyone involved.

In this situation, sometimes it is best if the unrealistic parties or agents cut their losses. The seller might go on to become an expired listing two, three or more times over, until they get to the point that they really want or need to sell and are willing to listen.

In that case, it is all about timing. In the meantime, the seller’s home has a stigma associated with when agents see it was on the market several times.

An unrealistic or demanding buyer might ultimately go through listing agents directly, having had more than one agent decide to quietly sidestep them after devoting a significant amount of time, effort and resources to try to help them. Just because we can, doesn’t mean we should.