I am also a Kid's leader at our local church and help my dad with his insulation business. 

All this is to insulate the price if things go south.

Things like glazing % on the windows and such and such insulation in the walls.

Has anyone else noticed the lack of insulation in some Chicago neighborhoods?

We'd planned on insulating and finishing the ceiling on that.

My initial thought is to fix the pit with a patch and wrap the plumbing in foam insulation, is there anything unethical about that?

You can't put up sheetrock until the insulation and wiring and plumbing inspections pass and so on.It is a marathon not a sprint.Or, if you want to make money at it you can do what I do:This works in "normal" housing areas like Phoenix, Las Vegas, Austin.

Poor insulation?  

Bought appliances for $1500 but the kitchen sits unfinished, the bathroom is gutted, a back room was cleaned up to make more living space but won't work well unless its insulated from the underside and its now yucky winter and Ill pay through the nose to have someone go under there.

That seems unlikely, but what do I know.Buyer's intent is to purchase property, convert entire building to living space (which, according to deed restrictions, just means insulated and conditioned space), and then refinance in 6 (conventional) or 12 (FHA) months to pay off owner-financed note.