Your agent should have the experience to navigate this.

Go around the nation, you'll notice this is a common trend.You need to bid deeper, and agents need to start pricing things more appropriately. 

Not all agents are created equal when it comes to investments.

I've never heard the 25% thing before, but any difference between FMV and sales price would technically be considered a "gift" with potential tax implications for your parents.You can avoid most seller costs as there's no reason to use agents in this case.As an FYI: I always recommend avoiding a FHA loan, if you qualify for a low-down payment conventional loan.

I think option one is better if you want build a lasting relationship with this agent.

Or working with a real estate agent yet? 

I see you're a real estate agent, but do you invest in real estate personally as well?

But I spoke with an agent earlier on a property and he gave me the NOI for last year for Airbnb on it

Rent would be ~1,400 to 1,800 / month which is above market rate but housing is in very high demand and price is in line with what seniors who live on their own would be willing to pay based on my conversations with local Real Estate Agents. 

A lot of times it is best if the existing pm is the listing agent so they can negate this along with tenant communications.