I'm NOT an expert in permits, inspections, and appraisal.
However, I can share with you that I have had a similar experience with my clients: Property is in Anaheim, CA.
The broker follow through in making repairs recommendation to the bank to fix the issues. The broker arranged for 3 bids to cure the issues and submitted all estimates of work to the bank. The bank authorized the repairs.
Me (the buyers agent) I contacted the city planning/pemits department and obtained the history of permits, certificate of occupancy, and inspection reports. I also contacted the assigned city inspector to discuss/verify the information found in the properyt history of permits and inspections. I coordinate with the broker and the inspector to ensure he comes back out to inspect the property timely with our closing time line.
We closed 2 weeks delayed, there were a lof of follow up calls and emails on my part (because the broker was not responding/moved too slow), but we closed!
The point of my sharing is "everyone" needs to work/collaborate together to fix the issues. Everyone is a facilitator to push things along.. Don't mix a business transaction with personal feelings. The bank don't want the house, the broker just want to sell the house, and you want to buy the house. It appears there is a meeting of minds so focus on clearing the tasks so everyone can go to the closing table.
Where is your agent in all of this? What is property worth to you - cost of repairs bringing property up to code vs. the appraisal value vs. a discounted purchase price? How will the appraiser value the property i.e., value with conditions of repairs and inspection or as-is?
Assuming you still want the house, then don't agree to any credit for "future" deals (zero benenfit or value to the "current" transaction.) Get the broker to focus on obtaining bids for the bank to review and approve.
If your transaction if too difficult to cure, then just walk away. Use the building code violations to cancel and you'll get your full deposit back. There are soooo many other properties to consider and many more will come on the market. I am seeing an uptrend in REO listings.
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