Finally, I know multi-unit residential properties are hard to find in the areas where you are looking, so to soften the monthly expenses blow, look for a sing-family home with a basement with a separate entrance that can be converted to an in-law apartment relatively easily.

If we come to terms with a price reduction, it may be in the sellers' best interest too...now they don't have to relist, disclose what was found, hope for a better offer (including the subsequent reduction), risk a softening market, etc. 

Your market is in "hyper supply" phase and prices are likely to continue to soften.

The market has softened a bit from the crazy summer, though, so there are deals to be had.  

It also appears there is a water softener? 

Then when the upstairs would do laundry, or when the water softener would run, water would back up into the downstairs kitchen sink.

They wait a while to do anything, and in the meantime the buying season is coming to an end or the market is softening. 

I'm somewhat wary of small town cronyism and I don't want the issues to be softened or made light of if the house, in fact, truly needs to be fully rewired.

The wood top dressing it up softens it up some.

That is all good news for appreciation but developers are bringing housing to the market in huge numbers so at some point 1) inventory will catch up with demand2) prices will soften with the increased inventoryIf I was going to buy in Denver and it was even possible, my strategy would be to source an investment at least 20% below market value with the intention to sell in short term.