Their insurance has asked me to return the month's payment for the remaining days of their rental (Unfortunately, I did not have a cancellation agreement).I am unsure how to handle this situation, especially since I couldn't fill the majority of the rental dates and had to offer discounts for the days I did manage to book.

If you want to document how you handled unique situations that could be sensible.

Hey @Jaycee Greene someone on our team handles the acquisition and lending/banking portion, we only do the monthly bank draws for construction costs!

The owners refused my advice to reduce price and they both sat vacant for months.

These days as you mention with STR almost everything can be handled remotely...cleaning, painting, locksmith, yard care, even drive by pictures of the house occasionally or internal pictures too. 

I am not sure how to handle this situation?

You can find both and you can reduce the commission but you may need to do more work.More specific on your questions about price, that is also negotiable.

OwnerRez – A comprehensive PMS (property management system) that handles bookings, guest communication, and even direct booking websites. 3.

Are you able to reduce your expenses quickly and easily if needed?

There is a big difference in how those are handled  HAHA I just saw a post and commented where the person wanted to ask if they should overpay for a home because they can get is seller financing.