Is the agent you put the offer in on the house representing you or the seller? or you?
There are three things you can to do, depending on the terms of the contract. Always go back to the contract to understand the terms.
1- Ask the seller to do the necessary repairs.
2- Accept the house as is.
3-Pull out of the deal based upon home inspection issues. (again consult an attorney and or your contract to see what ramifications there may be)
As far as the inspection goes, it is your inspection, you have paid for it and you are under no obligation to share it with the seller.
If there was a well stated Offer to Puchase Contingency for Home Inspection, then the failure to pass Home Inspection would be cause for you to either take back the offer (and get your earnest money released back to you in full) OR you can renegotiate ... and yes, you absolutely can factor the new lowered price into the negotiations.
You still have the advantage cuz your next step is signing a P&S with possibly only a mortgage contingency left whereas pretty much everyone else would at least one step away from signing a P&S.
So start negotiating ... the failed Home Inspection (assuming that you had a Home Inspection contingency and that this all falls within those conditions) allows you to open everything up for discussion again.
We can use this repair escrow on ANY loan: FHA, VA, Conventional, Jumbo. You name it, we can do it.
This will save your buyer from having to either invest for the repairs out of pocket, BEFORE settlement, and have a reinspect OR dealing with asking the seller to make the repairs in order to close. As well, it saves the buyer from NEEDING to do a 203k or other renovation loan.
Please give me a ring. I would be delighted to help.
Just because they dropped the price does not mean they have to accept the lower price - they could just be trying to get more offers and start a bidding war to drive up the price! Also, you don't state if this is a standard sale, short sale or REO - what they are doing with the listing price would mean something different in each case.
I'm a little confused though - your buyer's agent asked you to terminate the contract? Or is this a dual agent who also represents the seller? Keep in mind it costs you nothing to have a buyer's agent working for you... Your agent could have brought up the price reduction and the unchanged listing status for you with the listing agent when it happened and negotiated for you!