Half the battle is starting which it sounds like you are already there.  

We also bought a little old lady house that smelled of mold (washer leak) pet urine and smoke.

I knew something just did not smell right, though he has his story down pretty well.

What is the best way to get rid of this smoke smell in the carpet (and blinds)? 

Or just walk up and down these areas on a nice day to the glorious smell of weed wafting the air while kicking the bottles of steel reserve and/or colt 45 out of your way....watch out omar coming!!!

My suggestion which may differ from others is you should let the seller know up front what your intentions are so that in the event you dont sell it then no harm no foul. 

Given that, you're fighting an uphill battle -- you need to convince them that it's not worth $133K (even though it likely is).Since you'll likely find it difficult to argue the BPO (unless you have strong comps to support that their BPO is wrong), it's generally easier to argue that repair costs are higher than expected.  

the lot is 0.6 acre.The condition inside was pretty bad, nothing was working. it smelled horrible.

You should do the research yourself and be 98% sure that if the tenant left today you could re-rent it at or above what they were paying for rent.This smells of a turn key scam, be very careful.

This is not tie up a house with no ability to buy it and if it doesn't sell no harm, no foul.