Foundation Problems Uncovered During Inspection

[Account Closed]

I'm under contract for a SFH in Indiana and the inspection uncovered some fairly serious foundation problems. Basically a previous owner dug out the basement below the foundation footer and this has caused one of the foundation walls to settle. It's obviously a pretty major issue and would require significant expense to repair. I'd be curious as to how others have dealt with situations like this. My agent is talking to the listing agent to see what we can work out, but here's how I am thinking about my options:

1. Seller pays to have foundation fixed (unlikely given price point of home - $75k)

2. Seller agrees to lower price (I would need a fairly significant discount to make it worth the out of pocket expense and risk that repair is more expensive than planned)

3. Walk away from the deal (really don't want to do this but may have to....)

Any other creative ideas?