Offer turned down--thoughts please (long)

[Account Closed]

My short term goals:
get a mortgage and buy at least a 3/2 house to rent w/a positive cash flow.
Move into it, and either rent or sell my residence. This new house may or may not be _my_ house for the rest of my life.
If I rent my present residence, I don't have to buy a (different)rental, and I don't have to pay commission/costs.--I would go through an agent to do this, I think.
If I sell, I would use that money to either
a) pay off the new mortgage and use the rest to get another mortgage
or
b) use it all to buy another house.
Just writing this it makes more sense to just use that sale money to buy another house rather than paying off the anticipated mtg (bought at about $6000 in closing costs) and taking out another mtg, maybe with that same amount of closing costs--and why are they so high? I need to talk to the lender to see about that. There is the regular closing which will be about 3000, plus taxes/insurance, inspections, and what?

I am working with the agent through whom I bought my residence 12 years ago. I trust her, but also know her priority interest is the commission check. She said rents are high now because housing prices are so high. I kind of remember hearing something about that. There are big growth plans for the area I'm looking at.

Yesterday I made an offer on a house, potentially for me, but would probably be a good rental. I will see about getting a rental agent in to look at it. The offer was $22,500 lower than asking, which is $177,500. I know from the assessors records they bought it about 15 months ago at 167,000. According to the mls sheet, they've put in all new cabinets, sink, appliances, water softener 1 year old. New fixtures in guest bath, roof new in 2005. My agent said she added the seller agent commission to the 167 and comes up with that 177,500, and that the seller is not making any money on it. So it was not bought to flip. The previous owner may have: He bought seven months previously (03/2005) for 149000 and sold it for 18,000 more.

There will be the inspections.
Questions:
Asking price 177,500 in a neighborhood where many houses go for more, but many have a pool, this does not.
4 small Bedrooms, (not a major problem)
and the neighborhood is generally well kept.
The house does need some work.
In an area I wouldn't mind living in.
1 car carport-I'd rather have a 2 car garage, will probably have the carport enclosed as money is available.
No security system. I would probably put that in first.
This house faces west, and backs up to an alley. On the E side is an open strip, then a 4 lane street with a median. Directly east of that street, which is not now heavily traveled, is the neighborhood high school, and the view is basically the parking lot and the bleachers for the football stadium. Distance to the far curb is maybe .2 mile.
Bus stops are within ½ mile.
Community park w/4 softball fields, two soccer fields also across the street, but not visible because of open area and some large trees.
There is a well equipped gym and swimming pool, and just beyond, a community college. So there is traffic.
The park gets a lot of use. The lights are on till at least 10 at night many nights. The traffic to and from it should not directly affect me except as to noise, and I don’t know that would be a big problem, though it does concern me.
I don’t know if the road is used by semi’s of not. The masterplan has one major road 2 miles west and major expansion of another road 3 miles to the east.
North of the house is a phone calling center (Electro-magnetics) but there are 5 houses between that building and this house)

The mortgage on my offer puts it at just about the highest I can pay. It would be tight for me until I either rent or sell my residence, but I’ve eaten rice before. Not fun, but can be done.
They turned the offer down, say they can't go any less than the 177500. My agent insinuated they would not consider less. Their agent said if they took my offer, the sellers would be 25000 out of pocket. It's been on the market about a month. I have to talk to the lender to see about that, but I think I can do the 177,500, but will have to also do a second mortgage, which would be less than paying PMI. This is the only lender (countrywide) I've talked to.
I will see it again tomorrow AM, and also need to get a rental agent to look at it.

What questions should I be asking, what things should I be looking for, what do I need to do?