The inspector returned for the second inspection and the gas still wasn’t on. For the third inspection, he was able to complete the report. At this point there were only a few days left in the option period. The seller was demanding an immediate punch list of what we wanted to be fixed to close the deal before the option period expired. I’ve been through enough home purchases to know that rushing things is never a good idea. We insisted that the option period be pushed back. We sent several contract amendments as to such and never received any back. Finally, 24 hours before the option period was to expire we threatened to terminate the contract. At that point we got our option period extension. It was exactly this type of consistent push back that would eventually drive us to back out of the deal.
We spent the weekend reviewing the inspection report. All sorts of things were very weird. As an example, they had put in a walk way and they had put in a gate, but the two didn’t match! The fence was completely in the way of the walk way and the gate was in the middle of the yard. In addition, they had put drainage and the sprinkler heads, right next to the foundation, which can cause shrinking/swelling/cracking over time. There were several additional issues. I will say, nothing was major and these all could have been fixed in a relatively short period of time. But, it was a long list. So, we took the time to prepare a very detailed list of what needed to be fixed and sent it back as an amendment to the contract.
In the mean time the housing market had continued to degrade. The stimulus plan touted by the federal government was reportedly going to have ~15k in incentives for home buyers (the final plan only had about half that). The response we got back on our contract amendment was laughable. You can see it here:

This was the crytpic and vague response to our detailed punch list
The list we sent was very detailed. One would expect a response with each item marked done, not done w/ an explanation as to why. Instead the above is what we received. This further fueled our skepticism that these people were either trying to hide something or were just simply uninterested / amateurish in their approach.
At this point, it was clear that things were not being taken seriously or being done properly. So, we decided if we were going to go through with it we would need to be sure we got a good warranty and as the housing market was tumbling some concessions to potentially buy us some points on our mortgage.