I see your point in expenses looking skewed but that will be the case for many large expenses when ever they occur such as a roof replacement.

You could hire a lawyer but they might just review the contract and you'll find yourself running around like a headless chicken.Make sure you disclose EVERYTHING, as a buyer can turn around and sue you if you lie / keep quiet when they ask you a material question (Eg: "is the roof broken" (it is) you: "I don't know."

If this turnkey is fully rehabbed with many new or near new major items - updated kitchen & bath, roof, mechanicals, flooring, etc and there are a bunch of distressed properties in the area at those lower prices, those aren't true comps.  

The inspection report was pretty positive, roof is in average condition and will need to be replaced in 3-5 years.

At first glance I thought it would have to come down and turned into a parking pad, but after a second look it looks like it might just need the corner brick replaced - along with the roof and door of course.Never had to deal with something like this, so those that have - what would you consider doing?

A good turnkey property (like the ones provided by the Turnkey companies mentioned above)  should have thorough rehabs with all mechanicals and roofs replaced but you should still hold the reserve.

For instance, what does a roof cost to replace or to have a new HVAC installed or repaired?

The people I lend to are self employed investors, buying houses that need roofs and foundations and everything else, and need to close it in 2 weeks.

They don't blame me for buying it (this is before actual auction), but just kinda upset at situation and blaming each other for it happening.I find out that roof, a lot of plumbing and a small addition have been done about 2 years ago.

Since there is nothing now, you will have to run all utilities to the site and construct everything (foundation, roof, walls, and all interior finishes) I would definitely call some GC's and get a better ballpark figure and be positive the city will allow you to construct.