In escrow on HUD home, found out it needs septic work! Thoughts?

[Ian Saingarm]

Hi guys, we are in escrow for a property that is a pretty good deal!  However, we found out recently that it has roots growing through the septic pipes.  I guess the first step which we have to foot the bill for ($650) is to water jet cut the roots out of the pipes.  According to our agent, depending on that, there are two options.

• If the county allows, they can replace the tank for about $5k (or something to that effect, not a complete redo)
• If the county requires an entirely new system, he says it will cost $25k

Our agent is trying to get information from the county on this.

My question is will HUD re-negotiate a price now that they have to disclose this information (our realtor called the listing)? Our agent is saying one option is for us to cancel the deal and then make a lower offer, but I feel like that opens this property up to other investors to try to get it (there were many, and we managed to grab it).

The deal pencils pretty well, but not enough to absorb $25k, especially considering that other unknowns may come up.  Of course we already have a good bit of cash into the deal with all the inspections, fees, and typical "power not on at time of inspection" kind of stuff that always seems to happen.

Thanks for any advice!

@Noelle Saingarm