The property already needs some major repairs on a pre-existing addition so I am planning to demo that addition and build a large master bedroom in its place.

Windows were measured and demo started this week.

The five-property package has houses that need to be demoed and new construction built.

I personally wouldn't buy any house that has had un-permitted work done...unless it was my plan to demo that area anyway. 

Remember this. 4) PEX is wonderful, and ProPex I am a fan of5) When buying a REO the amount of deferred maintenance should not be underestimated.6) Sometimes it would cost less to demo out things than repair them- make sure you factor which is more LABOR and material efficient.

I had to walk away from a property that I thought was a great deal when an inspector caught a structural problem and recommended demoing the house and starting again. 

Even if they had... this bill seems extremely high for a basic SFR remodel, especially during the "demo" stage of the project. 

Essentially I just want to know that if I buy it I won't have to do any demo and the city wont be on my ***.

The house needs so much work,  including foundation repair, that it makes sense financially to demo it.  

Depending on your plans for the house, if you are demo-ing kitchen cabinets to install brand new once without changing the locations of plumbing and not changing the lay out, then it might be okay to do as long as it passes residential building codes.