Sorry for the lack of empathy but those people are idiots, plain and simple. Who buys a house like that without first getting a quote or at least a very qualified estimate on what it would take to make it habitable?
And no, the previous owners’ guess is not a quote. They might as well have asked a random person on the street. A quote only counts if the person giving to you will actually do the job at that price if you agree to it.
BTW — the same person who could have provided a quote on the work could also probably have let them know that construction loans weren’t necessarily that easy to come by.
In other breaking news, cars that don’t run are pretty cheap, too. Might be a great way to reduce your transportation costs.