It seems like a lot of people play fast and loose with zoning and it ends up hurting the next guy down the line.I just checked and the property is gone. 

Sell home, rent new smaller home/move to retirement community (disadvantage: we can have cash up front; but loose equity in the home)2.

The flip side is you will loose equity value for a few years. 

If I look to get a loan from private lender how can I screen him to check if he is doing it legally❓And how to secure myself against loosing any upfront fees if this become a scam❓ By putting it on escrow❓Any advise😎✔️❓

Usually in this situation buyer has defaulted and looses all the escrow deposit.

...a fixer upper"   for more then $150- 200K..without loosing sleep at night....maybe...

I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.One thing to note when looking at the individual markets, you can make or loose money in any market.

What you might have is loosely referred to as a pre-qualification - and that's not worth the paper it's printed on.Until that lender has reviewed those supporting docs and run your credit, he has absolutely no idea whether you can buy a property or not. 

Would you reach out directly to the owner of the property and maybe attempt an owner finance to take over the note and keep the owner from loosing his home or would you try to find a realtor and purchase through the foreclosure process? 

Other minor issues, loose railing on front porch.