I was told by a local experienced investor that insurance companies will always go cheap with paying out to contractors in the event a property needs to be rebuilt. 

Quote from @Ricardo Lemus: For a newer investor, a good investment is a property that pays for all expenses with some cash left over.

That will increase your material costs for the job and is the contractor paying for the material in their bid or are you paying for it and paying them a labor cost.

if they are pressuring you like this.PLEASE watch the American Greed Episode on Remmington Financial  .not saying these guys wont or don't fund of course.. but when I do my deals with my banks its common that I pay for the phase one and the appraiser directly..  

Your son is likely paying more than the property is worth, by definition, as the seller would almost certainly prefer a similar offer that was not subject to. 

If so, they can sell within 2 years and not pay capital gains taxes on the sell of the home.They could take that money and buy multiple rental homes in other areas if they wanted, or use the money to downsize in to a different home while still having money left over.

You take the div to pay on margin %, your sub 6%. 

You'll need to have 10%  thru the sale account by 5pm the day of the win, and will have to pay the remainder within 15 days of the win.

It is not uncommon - main reason we see right now is over inflated original ARVs and now borrowers cannot sell and pay off the lender. 

You may have to do one as part of the loan process and I wouldn't want you to end up paying for 2 appraisals if the lender doesn't take the one you ordered on your own.