Will I still get the title of my new house?

I found a house online, it was for 49,000 & it said fannie mae home and sells as is. We made an offer and it was accepted, I originally put contingent upon home inspection, but soon I was just in a big hurry, the closing date was to be june 26. Well, my dad and I went with our realtor one more time to get a estimate of how much I would put into it for repairs and carpet etc. My dad realized that the side of the house, siding and our fence, was exactly together with the neighbors fence. I dad explained how that can't be right, how homes are supposed to have a certain space to the side of them. We just found out, that our house is actually on the neighbors property, the garage is about a foot over on their property. Now the realtor tells me won't be able to get a clear title with this problem. Whats going to happen now? They have to remove the part that is out of their property dimension, but by removing it, are they going to fix the walls etc? They probably don't want to loose more money?