How to make deal with a property that has knob and tube wiring

[Walter Correia]

My wife and I are currently under contract and we are looking for some advice on how to close on this deal. The property that we are looking at asking price is 224,900 single family home with 6 br, 2bathrooms and 2,600sqft in town of Clinton, mass. We offered 228,900 and seller pays closing cost. After home inspection the inspector found knob and tube wiring and open ground throughout the house. Though we ran into this it's still a good deal, however, VA will not approve the purchase unless it's fixed. Our goal is to have the seller pay closing cost plus fix the electrical system. I want this to be a win win for us and the seller but I don't know what's a good offer moving forward. Any thoughts?