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Yes, but try really really hard not to say a word except "congratulations" when the house closes. You can, of course, cross your fingers that something scares them off from the inspection report!
(PS - if they weren't already under contract, I might have suggested pointing out a few things about the location to your friend, but not to the kids. Let the parent be the bad guy.)
Assuming they did not select this place at night with a blindfold on, how do you know it isn't exactly what they wanted ?? My daughter and SIL's first home purchase was not something I was too happy about, but it was theirs and they liked it.
You need to continue minding your own business. I assume these buyers are adults, so they are old enough to make financial decisions on their own. Only their parents are in a position to given them advise on this decision.
Family and friends can only suggest and advise if solicited, otherwise, yes, myob. . . in the end, they may end up loving this place and it will work for them, if not, hey trial and error, they will learn from their mistakes.
Learn from my experience. It is probably best to keep your opinions to yourself even if they are well intended. I have unfortunately, let myself get in a situations like this and thought being honest was the best route. In my defense friends and family have asked me for my opinion but I knew deep down they really didn't want my opinion unless I said the house was great. It makes it worse when they realize later you were right. No one wants you to be right, they want to prove you wrong. You have to let people make their own mistakes.
Many years ago a friend of mine was buying her first house. My husband and I had already been homeowners for sometime. She wanted me to bring my husband along for him to do a mini inspection of the place and offer our advice. She supposedly hadn't signed anything yet. I was shocked that she was interested in buying a very small 2 bedroom house when she had two small children and a 3rd on the way. The house was charming but small and did not meet the needs of her growing family.
It was on a double lot which she loved and talked about how the pool would go there, the swing set here, etc. For the same price there were many 3 bedrooms in her price range but none included a double lot. She had big plans to add a second story to the home. This baffled me that she would want to buy a house she needed to reconstruct completely to make it fit her needs. So she asked me what I thought. My husband had already took me aside and said he saw some issues with the foundation if it were true she wanted to add a second story. So I told her I thought the house was adorable but offered my advice if it would really work for her long term. She was not pleased and then dropped the bomb that she had already signed the paperwork an hour before we showed up. That would have been nice info to have. Well it didn't take long for her to realize it was a mistake. The second floor addition was a no go due to cost and structural issues. The 3rd child was a different sex from the other two kids so that ended up being an issue with the bedroom count. She was not happy and seemed overly crabby towards me when she did talk about the house. Basically I ended up being right and it bothered her. I was better off not saying a word and letting her realize the mistake on her own.
Did I learn my lesson? Nope. My young niece and her husband were buying their first house. Again, asked me for advice. Her being young and wanting everything to be perfect she passed up homes in nice locations due to the ick factor of old carpet, ugly paint and other cosmetic issues most first time home buyers learn to deal with and end up appreciating after making the house their own. She decided on a home that was completely redone by flippers in a nasty area of town. I thought the workmanship was shoddy and couldn't get over the fact she wasn't concerned about the nasty apartment building directly behind the home or the noisy train tracks a few houses down from her. She was annoyed by my advice and bought the place anyway. The apartment building has been raided numerous times for drugs. The trains were more noisy than she ever imagined and many issues were discovered afterwards as the flippers cut corners and all the pretty things started falling apart because it was cheap. In this case, she actually blamed me for not being more convincing to her of what a bad purchase it might be. Again, I am the bad guy.
Last time I learned my lesson. A family member bought a condo in a hip downtown area. Lots of bars, restaurants with a big social type atmosphere. Great place for a 20 something professional who likes to party but not really ideal for the personality type of my family member who was beyond the partying phase. The condo was also 3 stories with tons of stairs. I only mentioned the stairs being an issue to test the waters and immediately felt the annoyance so I shut up. 6 months later the condo went up for sale. The stairs were a hassle, the choppy living spaces weren't ideal, the bars closed at 2 a.m. spilling people into the streets as they hooted and hollered all the way down the block. So much noise that she hated living there almost immediately. She realized it was mistake but I didnt catch any flack for it because I kept my mouth shut.
Anyway, life lessons.
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In my defense friends and family have asked me for my opinion but I knew deep down they really didn't want my opinion unless I said the house was great. It makes it worse when they realize later you were right. No one wants you to be right, they want to prove you wrong. You have to let people make their own mistakes. 
Well it didn't take long for her to realize it was a mistake. The second floor addition was a no go due to cost and structural issues. The 3rd child was a different sex from the other two kids so that ended up being an issue with the bedroom count. She was not happy and seemed overly crabby towards me when she did talk about the house. Basically I ended up being right and it bothered her. I was better off not saying a word and letting her realize the mistake on her own.
