U want your parents to talk to their CPA FIRST.. if they go the development route they are now ( depending on the amount of units) creating inventory.. which will be taxed at ordinary income rates ( very HIGH)if they just sell they can 1031  and move on to something else.. many times when you run the math consider the risks of a partnership.. the sale of the land is far better than thinking your going to make some profit.. 

It is extremely difficult -- bordering on practically impossible -- to use a 1031 exchange to move gains from the sale of one of your existing properties into a property that you already own. 

A prospective Buyer is likely looking for a place to move in with their family, and if you have a long term tenant in place with no future vacate date, then you are really limiting your buyer pool, and effectively running down your sales price. 

Who is your sales person, who is doing the estimates, what percentage of estimates will lead to nothing.

It is a hard sale for them.

Am I correct to assume this is very similar to seller financing however without title transfer since there's underlying debt he doesn't want to trigger due on sale clause?

And if you want, use that money to improve your primary while the tenants pay the mortgage.Done that way you can improve your primary, get two cash flowing properties and defer all of the tax from the gain of your sale.

When I called on an FHA Broker I found that they no longer offer this product!!

Other fees really depend on what kind of transaction is taking place, whether it is a refinance, purchase, sale, etc.

Be an inside sales agent.