Sometimes deals do fall through due to financing or inspections. Most of the time the HUD sales do close, because they make sure to get proof of funds & financing prior to accepting the offers. I would continue expolring options.
There are FHA 203 K streamline loans that will allow funds for improvements. The Fannie Mae Homesteps program also allows for rehab funds on certain Fannie Mae REO homes.
Being a cash buyer is a great position to be in. There are a lot of great deals out there. When a home is listed at a below market price there is a lot of competition among able buyers. Many are getting multiple offers. Many banks try to leverage this situation, and ask for highest and best from all potential buyers. This puts the seller in a position to maximize the selling price.
The advise is to act quickly on something that is a great deal, and make sure you make it subject to inspections.