After finding out that the fireplace "is sinking" in the 60's house and much heated discussion, we've decided to say goodbye to the groovy big house. I'm sad because it's really a great space, and it would have been nice to live in a totally different type of architecture than we've ever lived in. But I think it's the right thing to do. We're going to put in an offer on house #1, which pretty much everyone said we should go with.
Keep your fingers crossed!