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As it is, there are more households forming than there are new construction starts coming online. 

I really do not want to back out of the deal, but curious if I could negotiate a reduced price or something of the sort.

My assumptions may be off  especially if you get the loan at a reduced rate, but it seems like you would need to get it close to the price you are indicating.

The seller will have reduced debt capacity because the existing note is still calculated as a debt - they MAY be able to include an offset equal to the buyer payments after a period of time, BUT often the seller is surprised to find they can not qualify to purchase another property3.

Hybrid Rental StrategyRent as an STR during peak seasons, then switch to mid-term rentals during slower months to increase income and reduce vacancy risks.2.

Also, I think this can be negotiated with the state as well and potentially reduced.

Since I have the $500K exemption, does that reduce the exchange amount from $2.5MM to $2MM?

Pro: In addition to MLS access your brokerage might provide access to other resources such as detailed online assessment data not available free to the public. 

The address was submitted to their red book and now shows up online as official address when I try to ship items from Amazon or similar websites.