An inspection will provide a great deal of information about the soundness of the home but one never really knows until construction/remodel begins. In addition to a property inspection, I would also hire a general contractor to walk through the property with you and provide a general estimate of the cost of work.
From that point, sit down with an agent to review the market trends and construct an offer.
Hope this is of help.
It sounds like you're already working with an agent - so I must ask - why are you putting a question like this on Trulia Voices, when you really should be directing this question towards your agent. They are your real estate advisor and should be providing you with these answers.
If you find you cannot work with your agent, please let them know that and find another. I'd be happy to offer my assistance, however you are in a situation in which ethical agents are bound not to interfere.
Just my opinion,
Zephyr Real Estate