Then, hopefully you have options and you mitigate your risk of not being able to close.

How did you mitigate around ?

You should do lots of research and drive by each property that you might bid on.It depends on the laws in your state as to how string your tax deed is.I have been very luck and now have a nice portfolio of tax deed houses.I am also currently litigating a tax deed property where the precious owner is trying to over turn the county issued deed.With proper research you can mitigate a lot of the risk.There is  lot of information on the BP forums that you can study on tax liens.

This was a turn-key property that needed light rehab and a tenant was found in 1 and half weeks.Hopefully with proper screening and background checks my risk is mitigated for the future on repairs.

If you are allow the attendant open it up, what's your plan to mitigate theft or is there a percentage that you just plan to write off as a loss due to nature of business?

Listing agents already know how this plays out, they've been around a while, so they tell their client a story like the above, and in reality the client thus takes the $380k offer.You can in theory mitigate this reliability issue by paying the HUD Consultant and GC to do their thing ahead of writing your offer, this will run you over $1,000 a pop for each individual property you are considering, which typically someone that needs a 3.5% down FHA 203k loan simply does not have to throw around willy nilly. 

If it was a 10 year strategy, it was probably in the 0-10% annual realm.If someone is uncertain in the market, a longer term hold mitigates some of that risk.

In my mind I thought it was them bearing it to the open market to see what value is determined by buyers via a bidding process and mitigating what losses they are able to.

Also, the project could actually take longer than the 1st house if the contractor adds contingency days to the schedule to mitigate the risk of damages  Good luckAs far as the payments go, there are 2 standard billing practices, percentage of completion which is by far the most common or you include drawers in the construction schedule based on completion on milestones.

@Scott Kelly Here is one on markets and mitigating risk - https://www.biggerpockets.com/blog/property-investment-risk-retail-pricesOne on asset class - https://www.biggerpockets.com/blog/defining-asset-classholistic-approachOne on how strategies for RE growth - https://www.biggerpockets.com/blog/8-ways-supercharge-retirement-real-estate-investing