I had a case where the upper unit would pour water on the bathroom floor so that it would come down on the lower unit. 

20% of the gross value of what can be built on it minus whatever it takes to make it buildable, like water and sewer taps and any other utility cost or cost 

In my research I've seen many warnings that have been, "wood with water is never a good thing" and various warnings about insects. 

Most contracts will have language similar to "Seller will provide free and clear title as of the date of settlement" There may also be language that says "taxes, municipal bills, water etc will be adjusted as of the date of settlement" read the contract you use and understand what it says. 

Of course electricity, wood for stove, gas, water etc are all included.  

You don't really need to go with a big name brokerage, just get all of your class at the board and make sure you stay out of hot water. 

@Damien Cox If you are finding a lot of seller leads that are under water, you may want to find a short sale specialist in your area and establish a relationship.

I keep hearing of homes that cannot be financed through traditional means due to condition deficiencies like broken windows, non-functioning kitchen, no running water, etc.

Look at the ceiling and see if there are any water spots or cracking5.  

I called the field service company that is maintaining the property to get access for inspection and found out that the instant hot water heater, according to their own reports, is likely bad.