Newsflash: Next Steps After Stucco Inspection

Hi, looking for some perspectives on reasonable course of action in this situation. Have an offer in on a home in Southeastern PA. Like most areas, houses do not stay on the market long here these days. This house was on the market for 2-3 months in the winter, no bites. According to seller agent, feedback was that “crazy interior paint” was a turn off….they repainted, put it back on market in early summer. It sat for 3 weeks until we looked at it. Our agent felt it was a bit overpriced…cute house but was priced on par with newly renovated homes in the area (this had an addition put on 20 years ago so that part of house is nicer, but not brand new- and otherwise very old bathrooms, dingy carpet, and no garage whereas comps have 1-2 car garages. We are fine with all of this and will put a little work in. Listed at 725k, we landed at 700k w/ 12k seller credit. We said we will not nickel and dime for inspection items- just reserving the clause for anything major. Home inspection has a bunch of stuff but we are willing to take care of those. Unfortunately the invasive stucco inspection highlighted some big concerns. The original portion of the home is masonry construction so that stucco was not tested, but the addition (guessing about 60% of the home exterior) is all wood framing. The stucco is failing in a number of areas on the addition. It is much thinner than recommended. 3 of 3 exterior walls are missing flashing and weep screed, and 2 of 3 exterior walls have rot in the wood sheathing in various spots, including around windows. Remediation is recommended due to improper installation and they of course are unable to say how extensive damage to framing might be without more invasive testing or tearing stucco down. I don’t want this to scare us off- but I just don’t want to overpay for the house as this could get very expensive and we will have to address it. I want to go back to the seller and ask for a reduced price based on estimates for remediation- but what exactly is that fair scope of work to get quoted? It definitely needs remediation, not just repair. I’m not interested in getting it re-stuccoed correctly- I t’s hard to even find someone to put stucco on in this area, it is possibly as/more expensive than siding since you need a real specialist to do it right and not a lot of contractors want to put it up. For this climate, it’s not the best long term solution. We want to stay put in this house. I would rather tear it down and replace with a good quality siding as many homeowners with stucco issues do. Is it reasonable to ask for a reduction in price close to that amount? And if so- would you price out replacement with just basic vinyl siding and we take on the cost difference if we wanted a better siding, or what? And cost for the whole house or just the addition? On one hand- the stucco on front of the house is supposedly fine but on the other hand, this house would look exceptionally weird with the addition done in siding and the front stucco. So we would definitely end up paying for the whole thing to be sided. Also- we wouldn’t know the extent of damage to framing underneath until the work begins so there is a risk that we could have to pay for a lot more than just stucco removal and residing. I know this is going to be upsetting to the seller as they already had to come down on their list price (even if the evidence supports that it was overpriced- I get that it feels like a concession to them already). If they don’t want to make additional concessions given the stucco issue and we walk, I suspect they will just run into the same issues with other buyers. So I think it behooves them to come to an agreement with us and I hope they see it this way (I know I am biased here). We are not trying to take them to the cleaners, truly just want to reach a fair and level headed agreement for both parties. We are motivated to get this house but don’t want to shoulder 100% of the risk/expense here as this is a serious issue to take on. Any suggestions for the most reasonable way to approach this and what we would use to support/base our request for a price reduction upon?