I can see why you are annoyed, but the amount of time you will spend on trying to get this appraiser a light reprimand (which is all he would get because he will have an explanation like above) will not be worth it.

Thanks in advance for shining some light on my situation.First, is my logic on this moving in the right direction? 

I would not put marketing efforts on hold, as deals will continue to flow (and may actually improve in light of current circumstances).

If anyone could shed some light on this it would be greatly appreciated

Cover lighting in tray ceiling - dining room, coffered ceiling - living room, tiled fireplace.

Lower unit: new floors, texture and paint walls, new light and plumbing fixtures, new doorsUpper unit: making a larger kitchen with an open concept living dining and kitchen, new floors, rock, tape and paint throughout, new trim and doors, new cabinets and new bathroom New windows and siding, 12x12 decorative concrete patio for each unit, new concrete floor in garage, new driveway, removing elec baseboard heat and putting naturally gas forced air in both units.

Those who are serious about being successful do the equivalent of measuring their macros and lifting weights daily.  

You can buy a $45k -$60k home in a decent area on a conventional loan, use your remaining cash to do a light rehab, and do well with it.

The seller is counting on you caving so he gets paid without having to get rid of the dead weight. 

Biggest advantage of getting listed is sheer weight of numbers of accredited investors already on the platform actively looking for somewhere to invest.