@Corey Rippeto it doesn't matter if the property has defects because you will learn that when you are invited to look around and you adjust your offer accordingly. 

They must not be defective due to dampness or otherwise.The landlord must ensure that electricity or gas supplies are safe and in good repair, and that every room has adequate ventilation and both natural and artificial lighting.Laundry, food preparation and food storageArticle 8 of the 2008 Regulations (as amended) requires private landlords to provide access to: A washing machineA clothes-dryer if the dwelling does not have a private garden or yardThey must also provide facilities for cooking and for the hygienic storage of food, to include the following: 4-ring hob with oven and grillCooker hood or extractor fanFridge and freezer, or a fridge-freezerMicrowave ovenKitchen cupboards that are suitable and adequate for storing foodSink with mains water supply, hot water and draining areaFor dwellings rented from local authorities and approved housing bodies, the relevant requirements are in Article 7 of the Housing (Standards for Rented Houses) Regulations 1993.

You have knowledgeof a defect and won't stand much of a chance in court.

Thanks for your reply and suggestion @Scott M, in your case, was the hot water defective? 

Somebody wanting to sue for you backing out of a bad deal or accusing you of selling them a property with defects like unknown termite damage).

If you have lots of sloping floors, sagging joists, visible defects or damage to crucial framing members, these can add up as well.

If there are any defects -- even as small as a broken window or broken water heater -- FHA won't insure.Sellers that won't sell to FHA buyers likely know that the house won't pass FHA inspection.

People on the internet forums act as if the 3rd party is going to work with the seller and conspire to sell me a property with defective title.  

@Natalie Landry One important thing to figure out is whether the state the property is in is a "caveat emptor" state, like we are here in MA.In practice, that means that the seller is not required to disclose hidden defects.  

Discounts can be applied to improve the yield but usually the discount is applied for a reason such as a defect in the loan but certainly those reasons can be to obtain a suitable yield to make the investment attractive.