However; that sort of capital is a mere fraction of the all the capital that exists.

You should speak to a real estate fractional CFO who can guide you in detail and speak to you about KPI's.Gita Faust

Does anyone know if partnering with a seller of a multi family building could allow for the seller to defer paying capital gains taxes as follows: I partner with the seller by buying in for a fraction of the fair market value.

She may see fractions of it and the rest goes to the owners of the company which helps me in no ways.

The dates of the first sale will be your weather bell.There is another strategy that is slowly gathering steam for situations just like this using fraction TIC products that have a buyback provision.  

Is using these fractional share investments a good “safety valve” if the purchase of a real property 1031 falls through?

I am quite interested, I would do my due diligence before proceeding.I think the difference is these are NOTE  partnerships or fractional with multiple investors on one note.. 

Even if they achieve a fraction of the projected valuations the money flowing into RE will be tremendous compared to other areas.

Yes, code violation liens can usually be negotiated down to a fraction of the total (the daily fines which grow so large).

Paying more won't make a fact more of one and often you can get the same information at a fraction of the cost.