Be sure to express your concerns to your Realtor. He/she is supposed to be looking out for your interests. In our market we have a great where the seller pays for your representation. Take advantage of that representative and ask him/her the same question you are asking here.
Typically with bank owned foreclosures , the bank is selling the home "as-is" and will usually not fix anything. If you still are interested in purchasing the property, you may want to try to obtain special FHA 203K financing. An FHA 203K loan is designed for rehabbing a property that needs work in order to be livable. With bank owned foreclosures ,you have to remember the property has been sitting vacant for quite a long time with no care. As far Code Violations, the bank is not responsible to bring the property to code. It will the new buyer's responsibility to bring the property up to code to pass city inspection. It sounds like this property has many issues that a first time homebuyer may not want to buy into. Before putting an offer on a foreclosure REO, I always inform my buyers that the bank is not responsible to do any repairs that an inspection may require. The Buying Process is all about managing expectations and educating buyers.
Anna Maria Kitras, Broker Associate- Keller Williams
Always keep in mind that Bank do not like to take care of repairs and sometimes code violations. Was this disclose up front and if so, did you and your agent did some homework on what the violations are and how much are owed. Code violations can be very expensive. If you are within your inspection contingency, there are still time to negotiate or back out, but you must do this quick. If you are passed your contingency you run the risk of loosing your deposit but I would suggest to still ask for a credit, you just never know.
Best of luck,
CDPE "Certified Distress Property Expert"
RE/MAX Marquee Partners
The rules actually are not set in stone. The lender needs to sell the property. Just because it says "as is" means there is always room to negotiate. Remember that market value is the price a willing and able buyer will pay. If the property has long market time and is over-priced, then you may have some negotiating room. However, that may mean the YOU are the one fixing the code violations, so negotiate a price that makes that worth while.
There are quite a few homes for sale, but very few nice ones. In Los Angeles there are a number of items that are REQUIRED to be fixed, including the gas meter shut off and shatter proof sliding patio doors, smoke detectors, etc. Most lenders and Realtors know that one has to be prepared to make a property saleable.