Advice for buying a house in bad condition

[Adam Stotler]

I am buying a SFH for me and my family to live in and will be renting out my current primary residence. We found a house in a great area with high appreciation historically. After the inspection there were many issues found with the house including some major issues, but not including roof, foundation, or electrical. Even with the issues, we really love the house and want to make it work. The house was listed at 315k, market value on listing sites showed that the value of the house should be around 320k and we offered 305k and the offer was accepted.

Without getting into the details of the actual issues, I wanted to ask for some advice on the best way to acquire this house. So far we have sent the majority of the inspection list back to the seller for them to repair and if they fix all of the issues (about 80 items) then we would be satisfied and move forward with the deal. They will have 5 days to let us know what they are willing to do. After talking with the listing agent, they sellers seem very motivated to let go of the house. However, I'm thinking that it will be very expensive, and I don't know their financial situation, but it is possible that they may not be able to fund the work that is needed. In that case, I would still accept the house in its current condition if the price was renegotiated and significantly lowered. 

The part that I am a little grey on, in this scenario, is how to determine a fair amount to ask for as the new price. Should it be the quoted cost of repairs minus the current offer amount? In this case, I feel that if I am the one coordinating the repairs and fronting the capital to do so, as well as assuming risk of things not uncovered by a standard home inspection that may arise, then the price should be a fair bit lower. But exactly how much is fair? Are there any general guidelines on this? Calculators? Anyone experienced have a system that they use to determine this number by a percentage or some such? Please let me know how you determine a fair estimated value of a house before repair or what you might do in this scenario. Thank you so much for reading and look forward to reading your comments. 

-Adam