We have had some really good news! We went back to the Electrician and asked what the cost is to make the house legal. Apparently making the house up to "code" was to rewire the house and put in many more outlets on top of the grounding and replacing the breaker/panel. We are now done!
The seller is going to pay for the repairs and we will assume the city permits (only about a couple hundred $$).
Now we wait until May 15th to close!!!
In the meantime we are waiting to hear back from some designers and the contractors about what the cost will be for adding the new bathroom and carport.