@Cheryl WellmanHi Cheryl, welcome to BP!

I realize it's just an example and my comment is a generalization but just something to be aware of.With regards to the original question, I think it comes down more to what you want to do and what the offer is for walking away vs. rebuilding.That is the exact example a public insurance adjuster used when speaking to a local investor group a few years ago.

Are they doing everything possible to expose properties to the broadest possible market?

When you start to do a lot of projects, 50% is a lot of money to go out when you are scaling, finding deals, and doing all the other footwork.

You likely only made a down payment of 3-20% ....but you still get to write it off on the full value across 27.5 years.So 400k/27.5 = 14,000 ish a year of a write off where during the year you didn't need to incur an actual expense, no cash outflow. 

Definitely no way to do a full gut rehab or close to that for $50k today.

I think you'll be hard pressed to get an ARV of $140k IMO...I'd expect something around $115k or lower.

It's like full dividend re-invest on an index fund.

I actually am working with a buyer right now that wants me to manage his house hack.  

People want to be on the water not near it.