Should I be concerned the bank may have issues with this? 

Sit down with a 1032 Accommodator and have them explain the details of a 1031.   

In my experience, you can absolutely use hard money in bank owned reo auctions...you still don't generally get access and thus need a lender who does need an appraisal in this scenario. 

With the exception of building a trailer on the property (these are hard to finance), this sounds like a good plan AND if you are using it for your business AND your business pays more than 50% of the rent (if you have more than 1 tenant), then this is a more financeable property in the eyes of banks and credit unions as it would be consider a commercial "owner-occupied" property. 

My though process in undercutting the bank by 1 % was to possibly attract qualified buyers.

Should I talk to an appraiser before the bank gets an appraisal?

There are also additional costs of operating and maintaining an LLC, like separate bank accounts, annual report filings, tax filings, etc.2.

.: Quote from @Jay Hinrichs: Quote from @Matthew Banks: Very interesting post John.

I am guessing they probably raised $15-25M from investors for the deal, so while the bank would still be covered investors would appear to collect maybe 10-20 cents on the dollar if they were to liquidate.if that's the case then I don't see buying one year really does anything unless I am missing something ? 

Any gurus willing to explain what is better and why?