Sometimes we get smoking deals on properties because they have a material defect that the seller doesn't know how to fix or can't afford (foundation issues, black mold, hoarding, etc.).

Can the seller terminate contract due to environmental defects in ILLINOIS?

It made the buyer back out of the sale because this buyer was convinced that the house could cause birth defects. 

Maybe there’s a defect in the plumbing they aren’t aware of and letting them know might prevent others from having the same challenges.

I don't need/want my insurance company to be involved in every minor defect the house goes through, I just need the insurance to cover catastrophic loss like a fire taking the entire building.Of course I also don't live in areas that are prone to hail, flooding, tornados, or any other dramatic weather conditions.

Okay so basically I found a seller who wants to sell their home for cash, we talked about the defects of the home and I have a few questions.

If you are not using a lender then you can accept the title with defects.

PS You mentioned things that "specific issues raised were unknown to us" In Maryland a seller must disclose "Latent" defects.

Again, in NC (where I'm an agent), a property can sit on the market...if it sits as long as 60 days (as you mentioned in your post), it was probably over-priced, or has some defects that most buyers don't want to handle...especially if the property has recently had a price reduction, I'm not surprised that "another offer was coming in the same day as your offer".  

Or it could also be bad breakers (check if it's only happening on certain circuits), defective electrical service supply/voltage fluctuations (unlikely unless the whole neighborhood is having the same problems), service entry wiring defects, a loosely connected neutral or other issue with the neutral, loose connections anywhere in the circuit with the flickering lights, or a number of other things we wouldn't know without being able to inspect the system.