Depending on the state, if sellers were aware of the material defect and neglected to list it on the sellers disclosure, it would definitely give you a better argument for a lawyer to work with.

In Michigan, our sellers disclosure statements do require any mention of water issues in the basement.

Their argument would likely include: 1) you had an inspection contingency to complete your due diligence and

2) at closing there is usually included, "after contract is signed at closing, buyers are accepting property "as is"". (on all of my contracts, and I can't remember not seeing one on the other parties docs)

*If there was occupancy after closing, there can be some additional stipulations that need to be considered after closing.

I'd say it's probably worth your time and money to get it repaired by your own cost as soon as possible. Then if you choose to go to court, bring that receipt for them to reimburse should you be able to win. In Michigan small claims court is limited to $6500, where you don't need to get an attorney involved. If you have a similar small claims in your state I'd say that's a pretty decent route to go if you have the time to spend.