I understand that the chances of getting audited are minimal, but I wanted to make sure I can defend/substantiate any deductions just in case!

It will be up to you to defend any allegation that you are engaged in foreclosure consulting without a license or exemption, if you don't have a license or exemption.

It sounds like you could defend your intent to hold.

Then a liability claim happens and Doe,LLC was negligent...John Doe’s Policy listing Doe,LLC would not defend or pay damages as John Doe was not negligent in the claim.

They aren't going to be the defendant in court if their opinion proves to be flawed. 

Whether you're legally liable or not, I think you'd still run the risk of being sued and having to spend money to defend yourself.  

You will have to defend for the tax.

If he is serious about pursuing this then he will hire an attorney and you can defend your position.If you were dishonest and knowingly hid a problem in order to take advantage of the buyer, then I recommend you do the right thing and help correct it before he comes after you and asks for more.

Defendants don’t necessarily have to be actually served, otherwise vacant properties could never be foreclosed.

You can use the same ratio, if you believe that is wrong you can allocate price but have to defend if audited.