I may also qualify for a lower down payment with traditional financing given this purchase may not be defined as an investment property.Does anyone have any experience owning a single family home with an ADU as an investment property?

A traditional lender will never give cash back for repairs at close.

Upon some further research I found;The traditional Roman fasces consisted of a bundle of white birch rods, tied together with a red leather ribbon into a cylinder, and often including a bronze axe (or sometimes two) amongst the rods, with the blade(s) on the side, projecting from the bundle.[3].

The banks may not consider your offer as seriously if you are getting conventional financing, but there is absolutely no rule that states that you can't get a traditional loan against an REO.As for inspecting the property, my guess is that the bank is stipulating that you have no "due diligence period" after the contract is signed.

If so and they are shown as a loss, can those loss expenses counterbalance a part of the taxes I would need to pay due to the conversion from a traditional IRA to a ROTH IRA?

I have not seen anything that high anywhere - traditional SFR PM fees are like 10%.  

Are there some creative ways of bumping that number up, while still using traditional financing that I'm missing out on?

A traditional bank would had not given me the loan amount needed to purchase & rehab (203k loan).  

Seller financing is not a bad idea, will probably attract investors as well as those who have poor credit scores and can't get traditional financing.   

I don't think I could even qualify for any traditional financing, as I'm 23 years old and got my real estate license about seven months ago, and I've yet to generate a steady income, but on the plus side I do have an immaculate credit score...Anyway, I plan on buying a condo at a judicial sale in Chicago this month.