 isn't that weird (stuff may have been winterized wrong) even in a well-built house. But I'd be more concerned that maybe the pipes burst a while back (when did you see it?) and there could be mold damage from moisture.
In a general sense I do not think this is one of those "Call off the sale" situations but maybe something where you have an inspector come in and make sure the repairs were carried out properly. If you have a lawyer, this would be a good time to involve them.
The pipes burst... in late August?? I'm here in Wisconsin, and that's not when unwinterized pipes burst around here (late winter usually).
I too would ask for more information on the specifics of what happened.
If I were to guess the pipes were not winterized correctly. Perhaps they turned the water off, but did not drain the pipes. So sometime during the winter the remaining water expanded and burst one of the pipes. When the plumber came back to turn on the water it started to leak.
Point is, get the details and get some kind of assurance that the work will be backed up if further issues are found in the near future...
I would get that house inspected before a repair is underway. You can cover over a lot of damage and any inspector who can't see the damage won't be held responsible for missing it. Once that fresh drywall and paint go on, the space will look good as new, no matter when the pipes burst.
You definitely want your lawyer to write the letter requesting the inspection. And of course, you want to hire your own inspector, not anybody affiliated with your lawyer, any realtor involved with this sale, or anyone who has anything to gain by encouraging this sale to happen.
If you can attend the inspection, so much the better. You want someone to point out the problems so that you can visualize them. A good inspector will also take photos. But as I said above, if the inspector cannot see it, you cannot know it.
Call inspectors tonight, leave voice mails requesting call back first thing in the morning, you want someone in there tomorrow or Wednesday if at all possible.
As you can imagine, if this was something that very slowly leaked for any length of time the damage could be significant even if it was only just starting to become visible.
And of course, as others have said, there is a perfectly reasonable possible explanation and a possibility that the damage truly is minor.
As intelligence people say, "Trust. But verify."
If I were in your position, I’d want to know EXACTLY why and how this happened, and what precisely is being done to mitigate it. Regardless of source, a burst pipe that soaks walls and flooring in summer can mean mold in 24-48 hours. If the pipes were winterized, why’d they wait until they had an offer before they checked the plumbing? Did the pipe burst a couple days ago and they were on it immediately, or did it burst sometime during the winter and they only just noticed?
Either way, I’d be very wary of buying into a mold problem, and I would prepare to walk away.
 I would get an inspector in there ASAP (not one your agent recommends, find someone objective) and make sure you can see the damage before they cover it with new drywall. If it's anything more than a minor leak I'd walk away. Require the seller to have a licensed and insured professional do the repairs and provide you with copies of the invoices showing the work was completed and what the warranty is for materials and workmanship.
Things like this happen.
Don't walk away. Do require full information on the damage, what was done immediately after to prevent mold and the repairs. Ask to see it in person with your own inspector both pre- (or current) and post-repair.
bilabial has it right, "Once that fresh drywall and paint go on, the space will look good as new, no matter when the pipes burst." Had to walk away from a place one time because there was no way to now how deep the damage went once they'd closed everything up after some repairs. If the damage is minor they should have no problem holding off a day or three for you to get your inspector in there to see everything.
I think you probably can and should buy the house but only after your inspector and independent plumber both see the house ASAP, ideally at the same time, and report to you that the problem was solved and all damages remedied.
This will cost you money, money that the reasonable and motivated sellers will knock off the price.
This should all be handled by your lawyer or realtor, and theirs. Professionals can help avoid strife on this business matter that often ends up having a lot of personal and emotional weight on both ends.
The one thing that I would add is that a burst pipe is not indicative of the condition or quality of the plumbing per se. Brand new and properly installed pipes can burst if they freeze with water in them.
Thanks everyone; this has been hugely helpful for us.
We got an initial clarification from our agent that it looks like the initial winterizing left some water in the pipes, and that froze over winter.
That does, obviously, raise the risk that water leaked into the walls at some point during the summer, and may have caused other issues.
We're immediately reaching out for an independent inspector, and will make sure to get the damage thoroughly inspected before they go ahead and close up the walls.
To be absolutely clear: If they close the walls before your inspector gets there, that is 100 red flags and you should walk.
Get your lawyer and agent to stop work on that house and get your inspector in there before they close the walls. If they close the walls, walk. Tell them that if they close the walls you will walk.
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Yesterday, I logged on here early and read that someone I admired very much and respected deeply had passed away.
Last month, Jack Layton had taken a leave of absence from his duties in parliament to battle cancer, having already weathered one bout of cancer and a broken hip. He had high hopes of coming back to the House of Commons next month, but treatment was not successful, and he passed beyond the fields we know early yesterday morning with his family at his side.
I couldn't settle after I read the news, just wandered around the house not sure of what to do with myself - stared out the window, kept losing my train of thought, read the same page in my current reading material over and over again, let cups of tea go cold, picked things up and put them down again. Grief is like that, and it is a wonder that anything got done at all yesterday.
Returning from an aimless walk late in the day, I looked up and saw a kite dancing in the breeze overhead. The scrap of rainbow colored silk was tethered to the planet by the lightest of cords and held in the chubby hands of a smiling toddler. I hadn't cried a single tear all through the day, but grief took over then. I crumpled into the grass right there, and the tears came pouring out like a salty flood. Why they chose that moment to well up, I don't know - I only know that a good man has dissolved back into the great sea of being, and I am very very sad. Here on earth, it's up to us to carry Jack Layton's vision into the great wide world.
My eyes welled up with the vision of you sobbing. The smallest most ordinary things can trigger such powerful emotions in us. May your heart find comfort this day.
You've so eloquently expressed how I very much feel about the passing of Jack. Thank you. I take comfort that his legacy lives on in the actions of all those he