They say the plumber says it might be a crack or leak and want to do a smoke test.

It'll be a good test for the format.

We're still finding them on the MLS by making lots of offers on REO's, but the pickings are getting a bit slim.

Latoya Coleman Glad to see the determination, it is something that will be tested because failure is inevitable in this realm but you have to learn to push through those obstacles and persevere.  

If I had to guess, I would say that they were victimized by a wannabe wholesaler in the past, who was not able to actually perform, and they therefore are using the EMD as a test of your ability to actually come up with some money.  

@Wayne BrooksThere is no bright line test of course.  

The chance might be slim to none over 3 to 5 years or it could be 100% if this loan is on their radar.

I was also considering installing a whole house filter right at the water meter if a water test came back badly.

Furthermore I feel that the profit margins in REI are very slim for beginners not only due to the market being very competitive, but because we are going to make some mistakes that more experienced investors will be able to avoid.  

In the startup process, we call this the "BUILD MEASURE LEARN FEEDBACK LOOP"For example, we make a decision to add a feature, then we do split tests, measure the results, and then make a decision based off those results.What I am saying is, I am willing to learn to do due diligence, do precise analysis etc, but I am just absolutely tired of shooting in the dark (or at least watching my dad shoot in the dark).