It is normal and should be addressed promptly.

That can be fixed by tightening the nut below the sink and is normal wear and tear.

Or is it normal to ask for quite a bit more off due to the potential effects of the water damage.

You are better off buying this as a normal purchase or getting cash to cover the rest of the purchase.

My guess is that you will be better off just paying a builder their normal profit on the construction than with a 50/50 profit split arrangement. 

In normal operations and stable markets, the bank margin is typically about 160-180 bps above the fed funds rate, however we are currently seeing them build close to 300 bps of margin which tells me they are still expecting volatility in the bond market. 

Normally, people open a S Corp instead of an LLC so that they can pull a salary from the S Corp and save on taxes.

There are lots of lenders out there that specialize in different things and have different workarounds. by working with the same broker, they'll understand where your priorities lay and since they have a better understanding of your experience, they can push for exceptions that wouldn't normally be approved.I myself am a broker so I may be a bit biased here, but if you do feel that your current broker isn't very good or that they are overcharging you then you can certainly explore other options.

My experience with these auctions is they are normally slow and inefficient because the new owner had inflated price expectations.

I've done a few Level 2 Alterations (Chapter 7) in southern Wake County and would recommend that you talk to your local planning and zoning department before jumping in, regardless of where you are (Wake, Harnett, Johnston counties.)