If that is the case, in my opinion, that is still better than the house sitting vacant for any longer and deteriorating.What would the tax consequences be?

We had that changed in the Montgomery County/DC form specifically because too many sellers were voiding the contracts when buyers would come in with unreasonable requests.But the reopening of negotiations I thought was a universal thing, as it's the case in 3 out of the 4 states I do business in.

But I doubt that will be the case in 5 years time, with the the rapid pace of growth that is occurring in those areas. 

Case in point, NYC had Cap Rates trend down for the 21 years I have been investing here.However, that may not hold up for the next 21 years.

Thats largely the case in the DC area.

In your experience, where do you think I stand on the fees and case in general?

I keep my rentals in Buffalo NY, where the property values and taxes are low and the rents are high in comparison, as I imagine is the case in Erie. 

So, i want to know what is the best option to analyze this case, because when i try to put this case in a valuation software the loan is discounted in the asking price and affect my cap rate and the IRR. 

What's worst case in 3 years?

If that is not the case in your area then let them turn the water off.