Buyer 1 receives this information and is asked if he is willing to offer more and realizes that it will cause high default chances if something goes even slightly wrong, and rationally says no.The other seller in the area raises price of MF2 based on the fact that MF1 sold for 20% over asking price.

Make sure you follow the required steps in your local laws regarding this...and DON'T skip, rationalize, or in any way deviate from those steps in any way!!!

(Irregardless of the actual law, it would arguably make total sense if the landlord could keep the deposit until the end of a fixed term lease, as security for the outstanding rent payments that the tenant is obligated to pay; but what makes rationally sense is a whole different topic as laws not always make sense.)

Apparently my income to debt ration is too low, they would only give me 90% over 20 Years even though my Active Income + Rental Income is double my debt. - Was very strange.

You will have a hard time rationalizing someone into taking the emotion out of their decision making process.

@Desiree Maya As the article you linked states, if the FHA approval has expired then the lender needs to confirm that HOA delinquency is <= 15%, and investor ration is <= 50%.

.#1:  Get the emotions out of it, and keep them out, or they will find a way to get you to rationalize some solution, that isn't a solution. 

What I mean by that is continuing to feed the pot with a bad hand using the rationalization you have a lot of chips in there already that you would lose if you folded...and that would be completely wrong.Poker is a lot like REI in this regard. 

People don't get penalties when actions area taken rationally and defendably.I believe that you should never do something you know is wrong just cause you can get away with it. 

I love applying very systematic ways to calm my brain and think rationally through a situation.