If the repairs are not sound I'd get an estimate to fix it and request a price reduction.I may also decide to do nothing- If I find evidence that the modifications were done using permits and passed the city inspection & maybe even obtained occupancy certificates then I would just close on the deal. 

I am now approaching 115+ days since assignment on my first 3 deals and because I am in NYS, my attorney tells me that I cannot even speak to buyer’s or seller’s attorneys due to “breach of contract”.I lost my first deal in fact because we were hindering on 130 days since assignment (should have been long closed) and the city decided to demo before we closed and were able to takeover in court.

So, the first thing I would look at is whether you would even be able to take on this project.

Looking back, I regret not buying another flip, or even a smaller house as a future rental. 

Buy the house as you normally would, then once it is yours, draw up a lease agreement for whoever you are renting it to-even if it is family that you are renting to.

They can also assist newbie tenants with build out.Always be advertising these units as they do have more frequent turnover than I realized.Collect larger deposits. 

Done right and you live with little to no out of pocket expenses possibly even make a.few bucks, you realize some equity and leverage the equity down the road for your next investment.  

Can anyone provide a referral to an attorney to assist with this?

I would love to connect to exchange ideas and even see if there are ways we can help each other. 

If the profit margin is tight and $500 makes a difference, see if you can save $$$ elsewhere.Interest rate buydown or seller assist is common place thanks to the jump in interest rates.