Fees should be clearly stated in writing, easy to understand, and justifiable.

There is usually more risk with a multi family so you want to make sure the risk/return justifies it. 

Don't include the fact you can build, to justify their price. 

Everything you have is pointing towards a 3 flat so pull another zoning cert. and if it comes back as a 2 flat use the info you have to justify it being a 3 flat as @Brie Schmidt mentioned. 

How are they justifying that cost?

This can be very expensive and is usually the worst choice to make because you can't justify the cost.2.

I wanted to kick him out and I feel like it wouldn't have been immorally justifiable. 

Once had a tenant that was deliverately damaging the property, so it wouldn't pass city inspection, so they could justify not paying rent.We finally caught a break when we got pics of their tools they were using to mess up the kitchen floor we'd just repaired. 

3) Several properties I lost out on have sold for as much as 25% more than what my own calculations could justify.

Fees should be clearly stated in writing, easy to understand, and justifiable.