As-is Negotiations: I need some quick opinions

[Tre Holland]

Hi, I'm looking for a few opinions and little in-sight on my current situation.. Sorry explaining this all is pretty lengthy but I REALLY need some advice.. thanks in advance =)

So here's the deal: 

The wife and I made an offer on a foreclosed property slightly above asking price (offer: 185K, asking 178K). The home itself was not seemingly distressed, it had been under renovation but wasn't completed. 

There were multiple competing offers above asking (the area is very hot and sought after and has always been that way), so we decided to increase a little more to 195K based on what our budget and we thought was a reasonable estimate of repairs.

Now, here's where the interesting part comes in:

Contract noted it was the seller requirement to have utilities on for inspection. My agent notifies seller that we're planning to schedule our inspection date, and asked to provide when they intended to turn the utilities on. The seller then says, the utilities cannot be turned on because the county won't allow it due to the utilities being off for an extended period of time. The electrical system would need inspected and approval by a licensed electrician and they were not willing to pay for such. 

So we offered to pay for that process and requested that they have the utilities on following. THE SELLING BANK THEN COMES BACK WITH - Well, its not going to pass the electrical inspection because the previous owners did work with proper permits.

So my question to you guys is... Is this grounds to then reduce my offer price due to not being able to properly conduct a full home inspection? Would it be justifiable based on the condition that they were supposed to have the utilities on but we found out all this crap about the impossibility of such after the agreement was made??

Thanks again!!!

[Marc Winter]

There are a several red flags here.  

I cringed when i read about uncompleted reno. When someone walks away from a partial renovation, most often they have created more problems than they resolved.  Again, at the end of the story, with the bank trying to bs and stall you about the electric, it is another cringe-worthy moment.  

A bank REO sale does not require any property disclosure form, and the property is being sold "as is, where is."

Without knowing your level of expertise/experience with renovations, your risk-tolerance and assuming the worst case scenario, I would walk and find another property.