Knob and Tube Wiring

[Nic Hostetler]

I am looking to purchase a house. I love the house and was very excited about it and ready to close. On the morning of closing the seller told me that he could not replace the knob and tube in the attic (with insulation) because it was still connected. I am pretty sure this is against code.. ?

Anyway, he agreed to pay me 2,000 (I could probably negotiate it higher like 3k). Can someone tell me the approximate cost of knob and tube replacement based on the details below? 

1. The home is only 1,100 square feet (two stories)

2. The first story and basement (water heater/ac etc.) has already been replaced with new electrical or at least the kitchen has. The living room is all grounded so I assume it is updated(?)

3. There is a new breaker installed with all new wiring and no knob and tube to be seen anywhere downstairs (unfinished basement)

4. Upstairs there is two bedrooms and one small bathroom (probably a total of 10ish outlets)

5. In the attic there is visible knob and tube and none of the the upstairs is grounded.