1st Deal: how do I use inspection info during contingency period

[Elizabeth A Shatzkin]

Hi All.  I made an offer on a small home that was accepted.  It was a $78,000, 1920 home, 2/1/980 sq. ft. and on a 9543 sq. ft. corner lot.  The area is really beginning to move and very little is for sale.  I offered $45,000 cash and got it for $50,000.  In their declaration about the condition of the home, they stated the roof was 3-years old.  Turns out the roof was put on 3 years ago but it was laid on top of the damaged roof.  Also, they claimed no knowledge of foundation issues and now we are seeing there may very well be some.  I have a foundation guy coming Thursday and we are in the 10-day inspection period.  How would you go about deciding if the property is worth trying to renegotiate purchase price?  The rehab costs have jumped from about $22,000 to now about $30,000, and the jury is still out on the foundation work that might need to happen.  Rehabbed I can sell it for about $110,000 or so.  We plan to fix and flip rather than hold it. 

Any thoughts would be helpful!  Thanks.