Should you allow the sellers to obain estimates to repair? To be fair and if you really want the house, this would be appropriate and you may want to get your own also. The repairs can be done by excavating on the outside of the home or have the systems that drain the water on the inside of the home(Ohio State Waterproofing, B-Dry to name a few), so the cost to repair will vary. So this too can be negotiated.
Finally, we usually do not change the sale prce to reflect and repairs but usually leave money in escrow to do this. Or once agreed upon, to avoid all the mess of the repairs, have them complete this before title transfer and have a Walk-through to reinspect this. And include the permits from the city of said repairs.
Alas, there is no easy answer and this in another reason you need a seasoned real esate agent to help you with problems such as this. Septic systems are similar to this, but that 's another story.
Best of Luck,
The Toth Team
Sit down with your agent and review the section of the contract that refers to the inspections, but I'd ask a few questions:
1). Did the home owner state that they did, in fact, have the basement/crawl space waterproofed?
2). If so, is there a warranty on it?
Some people are very handy and take on tasks like waterproofing on their own to save on costs and there's a possibility that they didn't pull a permit to do the work. That's not the way it should be done, but people do it anyway.
Keep in mind that your home inspector is not a waterproofing specialist (correct me if I'm wrong)! The sellers have a reasonable request by wanting to obtain written estimates by qualified waterproofing specialists. They are very likely not going to reduce the purchase price you all agreed to based on the findings of the home inspector as it's money out of pocket for them. These estimates are usually free and I'd recommend that both you and the seller independantly select at least two for comparative purposes.
You've already agreed to a purchase price, spent money on the inspection and likely the apprasial as well. While you may have "an out", the sellers may argue that your request is unreasonable (given that you're going off of what the inspector says, not a specialist) and they may want to retain your earnest money as a result if you choose not to allow them to obtain estimates.
My advice would be, if you love the house, to be reasonable and do your due diligence to find out what's really going on there. Only a specialist can clairfy the situation for you, so go to one!
I hope this is helpful!