The upgrade basically put a target on my back with the fire marshall as he came by to inspect the work and found that there were a few compliance issues.

Take your money elsewhere and GET AN INSPECTION!

First, I schedule an inspection, quickly.

In hindsight I probably should have gotten an additional HVAC-specific inspection and tested the measurements for the actual washer/dryer space.

I think negotiations on knocking the price down on inspection items on value add will be huge especially if its a flip like you mentioned.

In our area, the housing authority does annual inspections to (mostly making sure the landlord is keeping up the units) review the tenant and the landlord. 

Don't get into an argument with the listing agent over how their price is wrong or over inspection issues4.)

Remind them you had professionals out there to inspect the place multiple times and they found no problems.If they claim that their insurance policy needs your info, tell them to give you their info and you will contact their insurer directly.

These loan types allow you to do up to 90% of the purchase price and 100% of the renovations financed as long as you meet experience, credit, and LTC/ LTARV requirements based on an appraisal or virtual inspection.

If you buy a house you get a full inspection and check all its points, termites, roof, etc.