So we are now redoing a counter offer based off the inspection and the work that is needed to get this house in a better livable condition. We are going to amend the offer to include for them to replace the water heater (the thing is completely shot) as well as give us a $10,000 credit for us to do repairs that will be needed.
Also my insurance company is asking when the work will be done because in this condition they are saying that they might not be able to cover it, unless we are repairing it soon after purchase. Going to sign the new counter offer tonight. Our contingency ends on Friday! If they don't at least go 1/2 way on the credit we will walk and see what happens from there.