The goal would be to maintain the curb appeal / authentic look, but at a much lower replacement cost.Thus, I'm looking to find an insurance agent / receive quotes that understand this dynamic.

It's a bigger gamble in my opinion, UNLESS you KNOW the person putting the deal together and trust them. 

So it would require an omission of Fair Market Value, absence of any authentic appraisals or BPO's, and perhaps some 'mis-understandings' about issues with the house, and various other routes the seller could take, yes?

With all the competition from DC, MD, PA, NY, DE they are doomed until they find a new business model not involving gambling.

Seattle especially is pretty much all gambling on appreciation at this point, as the properties are valued so high that cash flow is extremely low to actually being negative. 

That is gambling. 

"Gambling" that the value of the asset will increase also has its risks.

No way to make money on that deal if there is no equity and if it is underwater.If you could get it for $0 down with her carrying the mortgage, and it would cash flow well, it would still be a gamble to consider but the risk would still be on her. 

If you really want to gamble your risks would be lower at the race track.

Try walking into your bank and asking for a 30 year loan to buy some bitcoin lol.Personally feel like bitcoin is nothing more than gambling.