Oil Contamination

Oil Contamination

I was interested in an REO that has been on the market since August 2008. The FMV is around $350,000. It is listed for $281,200. Today my realtor called me saying that there is oil contamination from the prior removal of a tank. They have done the testing, but the bank has not agreed to pay for it. I guess this is the reason why it hasn’t sold yet. The listing agent claims there are 20 offers on the table.

Before I knew about the oil contamination, I was planning on making a low-ball offer of $200,000.

1. Should I make a LOWER offer than that or STAY AWAY from it completely?
2. How much should I expect to spend on fixing this problem?
3. Once it is fixed is there a chance that this could come back to bite me? Do they test the soil frequently after remediation. (Looks like the tank removal did not fix the problem)
4. Will my bank/hard money lender deny a purchase loan, if they know about this problem?

Thanks for your help.