They are too blinded and jaded from decades of decline.   

And, 4 months ago I sent an update saying that the market has declined as predicted but we felt that it was starting to stabilize.

Never invest in any city with static or declining population.Crime rates: Never invest in any city on this list: Mapped: The Most Dangerous Cities in the U.S.Operating costs: The best indicators of operating costs are state income taxes, homeowner’s insurance, and property taxes.

As a beginner in real estate, should I decline to sign the offer with my agent or lock in, order an inspection, and then negotiate?

I compare leverage, insurability, taking write offs, cash flow, monthly  expenses, transportability, speed of decline in a crash, ease of unloading in a crash, forced equity improvement, things like that.

Is the micro market (neighborhood) appreciating, flat, or declining, and what is it expected to do over the next 5 years?  

Expenses go up every year, especially in the recent years with the inflation, so if the owner is not raising rents, the returns are declining every year. 

Although, I felt that we needed more information, I also felt that there were enough signs that the housing and rental market were declining.

I declined to pay for the repairs.

Generally these days, the 5 year prepay is a declining prepayment penalty where the penalty goes down year over year until it's gone.