Sure, it's worth something. The question is: How much?
A Realtor can run a CMA on the property and determine its value.
The way you've described it doesn't make it sound very attractive. Still, it is worth something.
The other question, as Michael points out, is whether you really want the property at any price. I'm guessing that, at the right price, you'd be OK with it--you do talk about the possibility of updating the house and gradually changing things.
Meanwhile, I'm guessing the owners pretty much want to get rid of the place. It's not in great condition and they know they're going to be facing a whole string of repairs and upgrades. They also know it's not too easy to rent and that, if you move, it may sit vacant for quite a while again. But you're in there right now, and if you bought, it would get that home off their hands.
You don't say whether you'd be getting a mortgage on the home or trying to get seller financing (which I suspect would be possible here). That'll affect your strategy somewhat.
Also, have the owners named or hinted at any price they'd like for the house?
With that set of facts and assumptions, I'd suggest getting a Realtor in to do a CMA, as I've already suggested. Also, determine what expenses you'll be facing in the short term with the house. And what would a home inspector identify?
Take the Realtor's CMA. Subtract immediate repair and maintenance needs from it. Then offer some percentage of that to the owner. Maybe 60%-70%.
Example: The CMA is $210,000. It needs $10,000 in immediate repairs and maintenance. Subtract the $5,000 from $205,000, and you're down to $200,000. You might consider an initial offer of $120,000-$140,000. (Unless, of course, the owners have suggested they'd be willing to let you have it for less. Then offer less than their initial offer.)
That's what I'd suggest if you're somewhat interested in the possibility of buying the house. Using that process, you'll get a good value. And the sellers will be able to unload their property without much hassle.
And don't worry about "insulting" the sellers. They approached you, not the other way around. And it's easy enough to justify a low offer. Remind them of the repairs they'll be facing if they don't sell. Remind them of the cost of the property being vacant another year. If you and they use a lawyer and not a Realtor to sell, you can point out that there might be some savings of a real estate commission. All of those have real value. Plus, as you note, real estate values may continue to decline. The house might be worth 10% less next year just due to market conditions.
That's what I'd suggest.
Hope that helps.