They're selling a portion of the house to the insurance company and don't want to suffer thru rebuilding.

Cap rates have compressed to where market value is close to re-build cost.

I used those funds to pay down my bad debts in effort to rebuild my credit so I can finance my own deals in the future.

In other words, if you would not rebuild, carry sufficient coverage to offset the "economic" value (including mortgage, etc...), but avoid claim penalties by either carrying enough coverage to offset co-insurance requirements---or engage with an insurer that offers coverage without.

It's basically gutted inside already and I would only consider buying it if I could purchase it for land value (it has 10 acres) + energy (it has massive solar panels) because its probably take 100k to rehab (assuming stucture is fine).I know most people "looking" at it are intending to tear it down and completely rebuilding...

Check if your toilets can use the standard Fluidmaster rebuild kit.

Permit office didnt have a problem giving me a tear down and rebuild permit .I dont want to rebuild the structure , but with the permit , when the property is subdivided , it adds value to that parcel due to an " valid bldg permit"

yes, pretty much we had to basically tear it down and rebuild it apprx $60k was invested

I don't need to rebuild it! 

Also, regardless of how nice you rebuild, it is still a home built 10, 15, 20, 30... years ago on paper right?