Terminating a contract

[Nathaniel J Mott]

I had an inspector come in to check out a house I have under contract this morning. The owner had been renting it out since 1985, and when the tenant moved out he neglected to turn the water/electric back on. The inspector told me we could re-schedule because he needs the utilities on to do an inspection, but that it was probably not worth my time. He noticed sagging in the floor indicating the main girder is probably broken, and water leaking in through the roof (it was raining at the time). He thinks it will be tens of thousands of dollars to fix, and said I should probably just get a GC to quote a tear down / rebuild instead of having him do an inspection. 

In order to terminate the contract, will I need a full inspection to be completed? He was very nice and didn't charge me for the inspection but I'm still planning on sending him some money for showing up. I lost the $1k in due diligence but don't want to lose the $5k earnest money.