Between forfeiting the Ernest money and finding another deal vs going with this property at 34.5k and a 60k rehab, what is the better option?

I let them break the lease by forfeiting the security deposit.

Doing it yourself is an invitation for mistakes and may end up in you forfeiting your right to perfect a lien into a deed.

They forfeited their application fee (3 * $25).

The tenant/buyer would put down a non refundable deposit of about 20K and then rent the condo for 16 months and then have the option to exercise the purchase of the property or forfeit the 20K deposit. 

My lease says clearly that if they break the lease they forfeit their deposit and that they are responsible for the remainder of the lease or until property is re-rented.See what your lease says first.

Or the seller forfeit the deposit.

In the event, the buyer does not cancel the transaction within 72 hours of visual inspection EMC to be forfeit in full to the seller with no future written notice.Is this normal? 

We extended to the 15th of April and the seller made sure to add a note on the extension "If you do not close on or before this date, your earnest money will be forfeited to the seller."

As per my lease, I forfeited my deposit and my $500 pet deposit and agreed to continue paying rent until it was rented out again.