I see Seabrook as a place to visit when you want and use the losses to offset high income net worth stuff.

Do I cut my losses and agree to work with their partner?

The buyers will do just fine, it's just an agent's lamenting the loss of a "easy score". 

I don't care how much a property appreciates, it can never catch up to those "exponential" losses. 

The point is if you get sued, you want to isolate your exposure for loss.

Should we be giving a little more grace to the folks who have handed it in and admitted defeat, simply because they will not compound losses on those deals?

If you find a good manager, you can still make as much money (or more) because they will attract better tenants at higher prices, reduce turnover, maintain the property better, reduce losses from amateurish mistakes, etc.3.

This can trigger unfavorable tax rates when the property is sold, plus there are potential loss limitations, transfer issues, distribution problems, etc.  

As you look to borrow from your TSP, consider the cost of that, both in the borrowing, the repaying, and the potential loss in capital gains. 

Is that financial loss that detrimental to you, to you cannot weather it?