1. Never rely on one estimate unless you are married to the contractor, always obtain three estimates.
2. I would not recommend anyone take on a house with severe water damage unless you are married to the contractor.
3. In today's market on Long Island, you are spoiled for choice, there is no need to take on a house with sever water damage.
Unless you already own it of course, then I would get it fixed (see number 1 above).