Weird particle board on walls-what would you do?

[Suzanne A.]

Hi all, I saw a house for buy and hold that is in really good condition. Wouldn't need much updating (except it needs a new roof).  The problem is that 50% of the walls in the house are covered with particle board (like the stuff in the pic, I found that on google; not from the house) and painted over with glossy paint.  At first glance, you might not notice it, but after 30 seconds in the house, I realized it was particle board and then saw it was everywhere.  It was used as wainscoting, an entire wall, the kitchen back splash.  The homeowners said the wood was up on the walls when they bought the house 30 years ago!! They tried to remove it and it ripped off the plaster so they had to leave it. 

If it weren't for this one thing, I'd probably have made an offer already.  But is a tenant going to say "What up with the walls?" and look elsewhere? What about selling someday? Any prospective buyers would have the same questions I'm having, and all I'd be able to do is shrug and say "I dunno, it's been there for 60 years!"  (Just fyi, this isn't an amazing neighborhood, probably B- so maybe tenants wouldn't care?)

Would you pass or perhaps negotiate the price to have someone actually remediate this?  Or would you leave the particle board up, since it is pretty durable against tenants? The house has been on the market for over 170 days and the last price cut was in January.  List price is about market value right now.

[Russell Gronsky]

@Suzanne A., why not just hang drywall over the particle board and finish it with a updated semi-gloss paint? Maybe less expensive than skim coating/sanding and a sure way to get rid of the particle board look and the glossy paint. It shouldn't stick out too much....drywall is pretty thin, relatively speaking. Also, I don't think tenants would mind if it does stick out slightly.