I cannot tell you how disappointed I was to read your additional comments.
Assuming the sellers did not know about the bathroom wall problem before your inspection, they have not (yet) failed to disclose. (In the future, yes, they are required to disclose.)
From the information you provided, you have the right to cancel the contract and move on if the sellers will not take corrective action or issue a credit in an amount that is mutually agreed. Since you are in NJ, I assume you also have a real estate attorney. In NJ, most real estate transactions are settled by an attorney, who also plays an active role in post negotiation inspections. Practices do vary slightly depending on where in of New Jersey.
The sellers agent, your agent, nor either attorney can force the seller to correct the problem nor issue a credit. Your agent (or the managing broker who has stepped in) and your attorney can enforce your rights to cancel the contract. So, yes, your choice is to either go forward with the contract and bear your risks, or walk away.
Given the extent of inventory that exists in most areas of NJ, I would be inclined to advise you to start looking elsewhere. Assuming you have an attorney, he/she will have probably already told you this, also.
If you cancel the contract, the seller is absolutely required to disclose this. Almost any buyerâ€™s agent will ask the cause of the fall through. The sellers may lose a lot more by trying to go back on the market. In my experience, once a deal falls through, it is difficult to ever regain another contract at the same price. This would be particularly true on fall throughs resulting from inspection issues. The fact that a deal falls through causes future buyers concern about both the property and the seller (why werenâ€™t they able to work it out?) For this reason, it is in the sellers best interest to negotiate a credit and get to closing. If I were the sellers agent, I would be advising them to work this out because their next contract may be a lower price, the next buyers may be cautious as a result, and we are headed into a slower buyer season surrounded by negative news.
For you, as the buyer, if you decide to proceed, I would recommend that you seek a credit over corrective action. Since you seem unsure of the sellers agent and perhaps the seller, how comfortable will you be with work performed/supervised by them? The other question for you to ponder would be what else might there be that you should know about? Beyond the bathroom wall problem, are you confident in the property and representations made? It could be a very well taken care of property that has this one problem. Review any disclosures and your inspection reports again in support of your final decision.
Best of luck to you.
Deborah Madey - Broker
Peninsula Realty Group
Although it is not your obligation to do so, you could place a phone call to the managing broker of the agent representing the seller. The broker, as the manger for the office would then take the necessary steps to ensure proper disclsoure was made to potential future buyers.
Are you working with the lisitng agent on this transaction? Or do you have your own buyers' agent?
An agent that claims the title "Reator" should never join a seller in willfully misrepresenting the property and deliberately hiding defects. If the agent goes ahead and breaks this rule, he or she could be reported to their broker and or the local board of Realtors.
If they want to sell it "as is" great.....they still must have full disclosure.