What this requirement is doing is setting the stage for an applicant to cry foul if they specifically meet a requirement as you state it.

Know what to look for in terms of evidence.... drug paraphernalia, odors, residue on walls and in furnace filters, etc.What did they say when you served them the prior notices to comply?

Jay, at this point, I am not interested in finding who dropped the ball or who was responsible for all the foul ups, I just want my final payment from you.

What exactly is the odor... rubber burning (e.g., the aforementioned drum belt), an electrical odor (e.g., motor failing) or that classic, dryer exhaust smell of hot, humid air and heated cotton and synthetics?

It looked great, but there was a little bit of a damp/musty odor in the home.

The next applicant that does not also have that requirement waived can cry foul. 

I got there as they were finishing up but couldn't go in because of the odor.

In my opinion its best to have an influx of sfhs and multi's.Yes in the midwest rust belt states you can find these homes dirt cheap and some are money pits but on the other hand some are cash cows and u ge them at great prices but what im also finding is that if you're wholesaling them some are hard to get rid of.I say you really have to have a good team either way it go though.Never buy sight unseen thats for sure,I have a friend of mines that has a 6 unit that he paid 1k for in Dayton Ohio right now and unloading it for 6k so these deals are readily available,also take in mind these are alot of areas where arson in pretty rampant.But theres risks in every deal u make,no deal will be foul proof.Dont get scared of talk to other investors,Theres some investors making boat loads of money off of these same properties in the hood where the suit and tie guys wont even get down and look at.For the same price you get these sfhs at you can get multis at the same price period.

If it has a bad odor, it is probably contaminated.Joe makes a good point on the expansion tank as well.

@Ben LeybovichNo harm no foul, maybe lesson learned ?