Start dates, who's in charge of what task, price, status bars, completion dates, etc. 

are completely worthless. 

It won't be as much death benefit as you have now, but it's better than losing the money completely.  

Should I just completely ignore the FHA loan and try to get approval with a smaller down payment?

I’d prefer to buy as large of a MF property as possible because of economies of scale and having to complete less transactions, but I haven’t closed or underwritten a deal that large before.

Once you sell your old property and use a QI, the exchange will be complete and your capital gains will be deferred.

As someone who's relatively new to the Fix-N-Flip business, I'm fortunate to have a mentor guiding me, he's successfully completed 37 flips to date.

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If you want to be completely self-sufficient, you're willing to build an Earthbag home or another building that can be earthquake proofed but can still be run without public utilities, you can spend a ton of money on a well and can have that well water processed to remove contaminated mine crap, you have a great off-road vehicle and you can figure out how to deal with the flooding without redirecting that water onto someone else's land then you can definitely live there.If it's an Investment you're after, give that up.

Whatever happens with you, seller, and your earnest money dispute or any potential lawsuits over it are completely irrelevant to me.