I agree & concur with all of what @Nik Moushon said.

I agree with Seth.

Something like this, just off the top of my head....you can probably find some cancellation notices/addendum online.As per the contract dated____, between xxxx and xxx for the property at xxxxxx, I am hereby terminating the contract as per the inspection clause, paragraph xxxxxxx.Both parties hereby agree to terminate the contract, relieving the other party from any further obligation, and the earnest money of $xxxx shall be immediately returned to buyer xxxxx.By:   Buyer xxxxxx____________________________.  

@David CruiceYep agreed 100%

But have the agreement based on the agreed to price before renovations.

you are too much into thr deal and your not a real estate agent which is very illegali am a property locator i specialize in wholesale contract properties for home flippers or for estate agent that want to invest with an intent to hold for rental propertiesi simply use wat my investors want specifically in a contract and property  i communicate with the owner or contract holder and try my best to let them know hey this is what a potential buyer wants their contract to look like and so forthif they agree then i step out and give them conract information to my flipper or invester and that's it i am done with the  transaction.my investers pay me for the information of a potential property for them before they even see the property or get any information about the property..

I would agree with the others of getting educated and figuring out what you can bring to the table. 

That being said, if there are dogs in there that you and he agree would be better off gone then you're going to have to look to 1031 exchanges to avoid a horrendous tax hit that your grandfather has been avoiding for decades. 

I agree with @Jay Shapiro, the placement fee is to cover marketing, screening, showing, etc... they did none of this.

That being said, I agree with @Irina Belkofer in that it is not worth the money to have an eviction between you and a family member.