Any advice??

I NEVER post on facebook, but I think I will in this case, because we need a decision, quick.  Like, by tomorrow.  So, if you have any advice for us, please let me know.

The house we are potentially buying has been owned by cat owners.  When we went to the inspection on Monday, we saw cat feces (what a word!!!) and traces of it EVERYWHERE.  I'm pretty sure it's been tracked around the whole house, and that means a serious health risk for all of us, but especially for Kate.  Even if it hasn't been tracked around, we still don't dare take the risk that it MIGHT be okay with her health.  I only get one Katie-bug!  I don't dare risk her.  I am the type of Mom that would never be able to live with my guilt if anything happened to her because I was too cheap to fix the carpet.  Now, we are not pet owners, and I have a VERY sensitive nose, but even Joel (who doesn't usually notice faint odors) thought it was gross.  The inspector, who I imagine sees all sorts of houses, asked us to come over an hour early because he didn't want to spend any more time in the house than he had to.  Yeah, it was nasty.  And where there's poop, there's totally urine, too.  I'm just saying.

I was on the phone pretty much all Tuesday trying to figure out what we would do.  Turns out, no carpet cleaning companies will guarantee disinfection of carpet AND pad.  I ended up talking to a disaster recovery company -- Servicemaster by Restoration Xperts -- and I'm totally plugging them because they told me they do have a product that will disinfect the carpet, but I probably shouldn't do that because the odor will linger until you remove the carpet and pad.  They also told me that the best use of my money would be to totally replace the carpet, with a layer of Kilz underneath sealing in the odor.  Yep, the odor is living in the subfloor, whether it's wood or concrete -- and we will smell it forever if we don't do that.  Something they told me we could totally do if we were handy with a paintbrush.  This is what's amazing to me -- they were totally nice, didn't try to upsell me, and basically told me everything I need to do to take care of the problem. FOR FREE.  Thank you so much, Tom!  **Basically, this is the silver lining in a really stinky cloud. **

Anyway, so I called around for estimates, and found out it would be around $8000 to replace the carpet, seal the floor, and get everything cleaned up enough for us to even move in.  And the sellers?  Yeah, we offered fairly high on their house, and they are TOTALLY UNWILLING TO DO ANYTHING ABOUT IT.  The real estate agent's words are "adamant" about not doing anything towards the carpet.  Yep, not even meet us halfway.  Or partway.  No nothing.  I feel as though they didn't take care of their home, then want top dollar for an inferior product. And don't want to take responsibility for the choices THEY made. 

So, my question is, what would you do? 
1) Bite the bullet and replace the carpet and enjoy the neighborhood? 

2) Get the fancy (smaller) house that is BRAND NEW (but will cost about the same in the end)?

Is there a third option we just aren't seeing?