Germain Act and using a trust for subject-to approaches that may work for this kind of transfer, but I’m not sure it totally applies to my situation.

You can present an offer that aligns with your financial goals, but be prepared to walk away if the seller won’t negotiate to a price that ensures you’re not left in a tough financial situation.

You can tell the tenant that they can ignore the notice as long as they follow through on paying.As the landlord you want to maintain control of the situation - not allow the tenant to do so.

By following what I have outlined above, and notify the contractors you are hiring that that title company may call to verify payment, you get in front of the problem vs. being last minute reactive to the situation. 

Your opinions/experience on this situation are greatly appreciated.

Quote from @Jason Hatfield: @Jaycee Greene  they require a non refundable deposit and give 48hrs to see proof of funds I would suggest developing a relationship with an HML/PML that would give you a "guidance line" that would basically be a "pre-approval" for situations like this to present to the buyer/auction company.

As for the decision, it's really tough for any of us to say without knowing your goals, your situation and the numbers on this particular house.

And while it is not your job to be an expert loan officer, it certainly helps to avoid these situations. 

Phoenix contains a rare combination of elements that have created an outstanding market for distressed property investments, including the following:Cost Savings: Distressed properties are sold below their market value and enable investors to take hold of properties at a trifle compared to traditionally listed properties.Strong Market Fundamentals: Being among the fastest-growing cities in the country, Phoenix ensures a high demand in housing and rentals, hence good potential for resale or income from rentals.Value Creation Opportunities: Most distressed properties need renovations; thus, such situations present opportunities for investors to increase equity by adding value.Population and Economic Growth: Phoenix remains among those cities in the country which are attracting more and more residents and business; therefore, this presents good, long-term appreciation possibilities of property appreciation and income creation.Challenges to ConsiderWhile the rewards can be great, distressed property investment is not without its challenges.

I think they just see the lower rent and run with it in that specific situation.