@Pat Aboukhaled I would ULS (unit lot segment) the primary house and include a clause in the call option that would prevent them acquiring the DADU.

House gets foreclosed on when a borrower is not paying its debt obligations - typically its mortgage.buying foreclosures is not for the faint of heart as you have no idea of the interior of these properties lastly while it can be beneficial also realize if there are a lot in an area those homes are the new comps when trying to sell so it lowers home values in an area 

They were told by their lawyers when they sold the house (after things were fixed), that the did not have to disclose the problems as they were fixed. 

Quote from @Jared Haxton: Hi BP Community,I own a 2-bed/2-bath condo in Prescott, AZ (near Embry-Riddle Aeronautical University, hospitals, and medical facilities), and I’m exploring selling it via seller financing.

Once the sellers accept the offers.. 

We are looking at a house that is being auctioned next week in Gulf Shores.

Yes, I have done that several times, both as a buyer and as a seller.

This is the only property we’ve ever seller financed, in case that clears up any questions you have about Dodd-Frank compliance implications.

I would like to learn more about seller financing, I see a lot of information on the internet about seller financing but honestly I am just confused.

The seller is offering seller financing at 2% interest with a 9-year balloon.