You can always back out if your inspection uncovers some other issues. 

They are a nice blend of apartment and SFR. 

The buyer SHOULD have gotten inspections which would uncover dry rot by poking into exposed wood, other than smelling musty or seeing black or green scum on the walls a mold inspection is more detailed and samples go to a certified lab. 

*Most* of the time it is, and a good flooring contractor can even blend stains to hide bad staining like that from animal urine.

Lesson #1 Buy at a better price.Lesson #2 Don't over invest/rehab items.Lesson #3 Set a reasonable rehab budget and expect way more issues to be uncovered as you go.We have to get passed the "if we were living here, what would we like" because we aren't living there and I like things to be pristine and aesthetically pleasing.

I do have a decent screening process and uncovered that their reported income was nearly twice their actual income.

Especially on older properties There can be lots of things uncovered.

Perhaps I need to blend the intrigue and passion from OOS with openness to local markets!

Bad faith in uncovered damages?

People connect better with people they can see.Work the buyers and ask the right questions to uncover the hidden sellers.