You should talk to your agent and ask if you can reduce your offer amount based on the inspection results. It's up to the Seller if they're willing to attempt a lower sale price.
If it's already bargain priced considering the roof and a/c, they may simply let you cancel your contract and they'll offer up the house to another buyer.
Banks and Short Sellers will not do any repairs.
If the roof is in poor condition and you are getting a morrtgage you may not be able to buy it if you cannot get homeowners insurance.
There are Fixer upper mortgages but normally they cannot close quick enough for a short sale. Ask your lender for a HomeStyle Freddie Mac or an FHA 203K morrtgage and they will tell you it will be about 60 days to close--maybe 45.
If the house ends up foreclosing then what happens is if the lender will allow it to sell below the final judgement amount at the courthouse, CASH investors will bid on it at the courthouse. Once the investor buys it they may rent it out for a year for lower capital gains taxes or do a FLIP at the maximum sale price--no bargain to be had for you. Alternatively if the mortgage was insured by FHA/Fannie Mae etc then it will possibly go on the market as a HomePath.com or HomeSteps.com or HUDHomestore.com house and only be available to owner-occupant buyers for the first week or two. Also it may never come on the market and may get added to the pool of properties sold to investors via the http://www.FHFA.gov
program where they will rent it out for the next 3 years.
Lastly the Seller may realize they may be better off with keeping the house and getting a Loan Modification or a Deed for Lease where they can stay in their home and rent back for 3 years.
So, bottom line is until/if you get an approval letter in your hands with terms that are acceptable to the Seller I would NOT spend any money on inspections, appraisals, etc. Hopefully you already have an approval and that is why you chose to pay for an inspection...
Good luck and keep looking if you feel you are overpaying for this property. Remember, though, there isn't much inventory out there so go take a look before you decide to cancel.
All the best,
Alma Rose Kee, PA
Future Home Realty