Not sure why a reverse mortgage is an issue, your purchase pays that off. I am guessing there is not going to be any proceeds to the seller so they don't want to pay for it. I doubt your fix would be acceptable to USDA, but you could ask. Contact a painter, I bet they can get-er-done.... more
Here's a link to a blog I wrote on how to find lease-options and rent-to-own properties: http://bit.ly/findaleaseoption
Although I'm a big proponent of lease-options (in the right circumstances), if you're able to buy now (or will be in the next few months), you'd probably be better off buying than doing a rent-to-own. Still, of course, it's your choice.