The inspection report guy said that he would firmly need the entire siding redone because of the water damage that came from having an incorrectly installed roof (no lips on the ends, no sealant) and no gutters on the majority of the ends.

Tiles make more sense in bath and kitchen and hopefully they still look durable when sell if you protect the caulk gap with water sealant.

Or you try the sealant with sand / grout to match the grout. 

Does your contractor use a sealant behind the tiles?

If you go this route, you will need to disclose the presence of the asbestos to any contractors or service providers (cable, telephone, hydro) who may have to drill through the hidden asbestos siding.Finally, you could give it a fresh coat of paint - and perhaps apply a sealant - and leave it.

Caulk sealant in the crack and build a little concrete curb/slope over it and it does the trick most of the time.

Not sure about just using a sealant.

Any sealant recommendations after the above treatment solutions you  would recommend?  

@Kevin HuangCracks:They need to be sealed back up with a closed cell backer rod and then sealant over the top. 

I ended up repairing it myself but I was on the way to get a new faucet aerator (since I broke the cheap plastic aerator trying to clean the pipe thread sealant accumulated from the pipe repair) when I was T-boned by a guy with no insurance.