The auction process is so far removed from the seller that it seems nobody at the auction company has the authority to discuss a price reduction that reflects the depressed value that these issues represent to the house price. 

I was considering asking for a reduction to 9.

The point is you make the choice regarding principal reduction of the HELOC vs being forced through monthly payments of principal and interest payments. 

If you have not been charging them for taxes and insurance all this time and you want to first start now, they will likely require a reduction in the base rent to account for the additional amounts paid to you for "CAM", so you should end up relatively even unless they are using a ton of utilities or taxes have gone up a ton, etc.You can have them direct deposit your rent, or set up an auto pay to your account.

Hello,For commercial/retail 400sf space: what would be a typical rate reduction for long term (3 - 5yrs) + few months advance + carpet changed out for linoleum?

There are commercial loan products available to first time investors although they are normally subject to a slight LTV reduction given the lack of experience. 

We are thinking about giving them a one time reduction in rent.

You held onto your property, and even though it took 10 years for the value to come back for you...you also have 10 years of debt reduction during that time.

But, we do not plan on staying in our current house forever so that doesn't seem like too much weight should be put into that.

Plus if you ask a bit higher and get it you always have you inspections and contingencies to get or ask for a reduction in price if you find things that hurt your numbers.