Furnace, and Plumbing, and Wiring, Oh My!

Yesterday we had the home inspection on our home-to-be, and all was not well. Apparently the sellers had disconnected the water and gas lines, which turned out to be a blessing since the furnace was shot and there were MANY water leaks throughout the house. We were also apprised that there was still knob & tube wiring visible in the basement (so probably in the rest of the house as well), and that it is live. The inspector couldn't even fit in the attic (entrance blocked w/fluorescent light, and about 18-20" high), but he did take a picture of a quarter-size hole in the roof. And apparently between now and when our realtor first walked through, a cat(s) decided to make her home on the first floor, so now a urine smell is present. We did already know about the surface mold in the basement (most likely caused by the water leaks!) so that wasn't a surprise. And structurally the house does seem to be ok, so at least that's a sigh of relief. Now we just have to confront the sellers with the ugly truth about their nice little fixer-upper, and see how badly they want to stay in escrow. At the very least we will need them to replace the furnace, fix the plumbing, unblock the attic, have the premises thoroughly cleaned/disinfected, and put some money from escrow into an account for the replacement of the electrical jumble. And of course, with all of this we will no longer be looking at a closing date of April 12th. At least the nice people at USAA have assured me that they will definitely issue us a policy since we are going to replace the knob & tube. I just hope this doesn't turn into the year-long escrow. Oy vey, people!