Seriously, a few thoughts.
Send a few pictures of this house, and send pictures of the neighboring houses.
You can go on Zillow and get an idea of what houses in the neighborhood are selling for. Don’t use rose-colored glasses and cherry pick the highest. Then go look at those houses and see if they’re better or worse from a value stand point (1 car garage vs 2). Also look at the general condition of comparative homes.
If you donate your labor, how much are the materials? If you add the cost of the property and the cost of septic and materials are you VERY far below the comparative home values.
On a different level, are you young and single? Wife? Kids? Go and sit in front of the highschool. Look at the people, how they’re dressed, what they’re driving, etc. That is what’s in the neighborhood now. Then go and sit in front of the grammar school. That’s where the neighborhood is going. Is it moving up? Or down?
How much do you love and want the house? It really does sound like a tear down. But if you’re by yourself with free time and money and you’ve got a thick skin, you can probably relatively quickly get a bedroom and a bathroom you can live with, and then work out from there.
What are they asking? Do they want the purchase price lump sum? Can you give them $5000 down, and then $500 a month or something like that? It’s a mortgage like a mortgage with a bank, except it’s probably not reported so it won’t affect your credit. Then you can use your credit to get some of the work done, but don’t get in over your head.
If you’ve got specific questions beyond that, I have some experience, and you are welcome to message me off the TRS thread. My gut feeling is you’ll do better to buy a bare lot and build, or tear this down and build. It’s just like restoring a car, it’s almost universally more expensive than just buying a finished car, and you don’t have use of the car while you’re doing it. I don’t know what you do for a living, but if you do it well and you can do some side work, do that and make some money and buy a better place.
My 2 cents, hope it helps.