If you had an inspection contingency built into your contract you probably have an out and the only money lost will be the money you paid for your inspection. All of your earnest money should come back to you if you want to walk away.
The appraisal may or may not pick up the same issues. Appraisals are way less in depth and more of a quick look through and comparison to comparable sales to establish a value.
I would be worried about whether or not the deal still works for you. If this will still cash flow or profit as a flip after the additional repairs you might still want to move forward. If you don't like the numbers now or think you may only break even I would would probably walk away and take my earnest money back.
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