Fully gutted and remodeled house - no permits - not up to code

We placed an offer that was accepted on a house that was taken down to the studs and fully renovated (“high-end renovation”). New plumbing, electrical, deck, finished basement, etc.

Upon inspection, nothing was up to code. According to inspector: “they didn’t do a single thing correctly on the deck” and “I don’t think it (plumbing/electrical) was done by a professional because a professional wouldn’t make these mistakes”.

Called the city and no permits were pulled.

The seller offered to get everything up to code at their expense, but we walked away because we just don’t like/trust the guy.

Found out they sold it to someone else today (like a day later).

I guess my question is just for future houses if we run into similar situations, is it an overreaction to walk away? Would it have been fine to accept the offer to fix it all or is that just asking for trouble? I know a lot flippers don’t pull permits, but it feels particularly lame to not pull permits and do it all wrong.

Edit: not sure it matters, but I think I’m particularly frustrated in this case because the seller is a fairly prominent real estate agency owner and came very highly recommended. He also is flipping houses regularly. It just feels irresponsible to be in a (relative) position of power/wealth and dumping these homes on people who likely don’t know better