I don’t care how you want to try and justify or rationalize it, it is what it is.  

It's more related to emotions and lack of rational decision making imo. 

In my experience the buyer sitting in the same room rationalizing why they gave an offer at 60% of asking is a whole lot worse than me as their agent presenting that same offer. 

Nope):1 - Learn how to analyze with real numbers2 - Learn what a plan is, and how to develop one for REI3 - Learn what is important to a REI...and then start thinking like one, instead of a homeowner.4 - Learn how Money Works5 - Learn how to analyze Markets (not economic...geographic) in order to find where the properties whose profiles match the criteria you need to execute the plan you developed.6 - Learn how to eliminate any emotions, both yours and the ones you think are driving forces for the buyers/renters that will be your clients7 - Learn how to eliminate any for of "rationalization" (most expensive word a REI can use) from your thoughts.8...and last, for now, learn how to describe yourself (when asked what you do for a living) as a "Successful Real Estate Investor". 

If you put yourself in the rational consumer’s shoes, you would consider the total cost of each of the following housing options:A) a monthly mortgage payment + utilities + insurance + taxes on a single family home that you buyB) a monthly rental payment + utilities on a 3 bedroom single family home that you rent C) a monthly rental payment + lot rent + utilities on a 3 bedroom mobile home rental that you rent D) a monthly mortgage payment + lot rent + utilities + insurance + taxes on a 3 bedroom mobile home that you own (own the home and rent the land)A deal breaker for me is a situation where there’s <$200 spread between options A/B and C/D.  

What is the rational for this change?

It is commendable that you (like I sometimes try to do) are using rationality as the basis for your investment thesis.

Rationally I'm leaning towards giving it back to them just to get them out of my life.  

How do you all account for pro-ration of utility bills when billing back to tenants?

When I began, I was looking for a market that had low cost of entry, favorable landlord tenant laws and price to rent ration around 2-3%.