Undisclosed damage found during final walkthrough. No contingencies. How should I proceed?
We did our final walk through this past weekend and found keys to a very nice custom built wooden shed with electrical. The shed is right against the fence between us and our neighbor's backyard. Turns out water collected and small chunk (approx 2' x 1')of the back wall has rotted through. It was covered with a construction bag and duct tape. I peeled it back and saw the studs of the shed and nothing else -- the interior wall, exterior wall and the fence had completely rotted through. I have direct line of sight in the neighbors backyard.
This was not noted on the inspection report because the shed door was locked. It was also locked during the open house. Sellers did not disclose this themselves.
I spoke with the neighbor who said his fence has been in this state since the shed went up over 10 years ago. He did not know the shed had a hole in it and was surprised to learn this. I think there is a very good chance the neighbor will report this to San Jose code enforcement.
Not sure what the best way to proceed is. Their agent has said they will have it repaired, but we haven't discussed any details on what that entails. It sounds like it would be a pretty expensive fix. My agent is pushing me to wire the downpayment so we don't miss closing, but I don't really want to do this because then there is no guarantee this will be addressed. My thoughts are to request a credit and am trying to figure out what is a reasonable amount.
I'm brainstorming what is worst case scenario for me -- rotting shed with active electrical sounds like a big hazard so I will potentially need to budget for demo, electrician to deal with the wires, debris hauling, fence repair. Is it reasonable to ask for a credit for this? Should we consider loss of value?
Edit: from the ROASTING I got in the comments it's clear that I am WAY overthinking this. I'll patch up the hole from the inside and likely never think about it again. Thanks!