Owner thinks they will and I’ll have to fight zoning.

Let em fight over it.Because of this, in this market, my target asset would not be what everyone else is chasing. 

It looks like more people (not on the lease) are living in the apartment (2 to 4), drinking, smoking, fighting, load music and partying goes on until dawn.

yea they fight the contractors for you, its a totally painless experience. sometimes they just bite the bullet contractor keeps the money and amex just reimburses you anyway

(b) In the event sellers refuse to pay, do we have a chance to prevail judgement  and (c) Is it worth fighting this case given the PSA is for a low 7 digit price?

This way you will have a better fighting chance of not getting that fine. 

This is generally speaking- you can always find a golden unicorn,  but depends on how hard you want to look and how much you want to compete and you will be fighting very experienced buyers in Austin, w/lots of bidding wars.  

I have done literally hundreds of closings with no title escrow or attorney and lived to fight another day.

Being analytical in nature I have to fight against the analysis paralysis when looking at non-performing loans because its easy to find things wrong with them,  but that's why they will sell at a discount. 

if you fight it, whats the likelihood you'll win the case?