The broker tends to be more in tune with what is transacting and market conditions.

After a couple of weeks of negotiation and getting her to accept the poor condition of the home we settled on a price of $39500 cash to her.  

@Detric MotonI like expired listings.I knock on their door.If they are not home, I put a pre-prepared yellow stick note like this one.If they answer, I ask them if their home is still for sale, If they say it is, I make an appointment to walk-through.I give them a cash offer (if wholesaling) or a sub2 or a lease purchase offer(s) (if in good condition).Good luck!

Got it for 30K almost move in ready condition, minor repairs.

Could be the condition of the property and the capital needed to actually recover any advances made.  

I am having trouble structuring the deal because the lot is zoned RLC which has a condition that states that only a law office can be built on the property. 

Roof condition & number of shingle layers.

It's a 2/1 duplex in San Jose, CA (off of 10th & Julian). 800 sq ft, older property but in good condition.

The property has been rehabbed and is in good condition.

The Lease needs to be clear in its definition of what you are trying to accomplish here which is that the Tenant pays for all of the operating and maintenance expenses of the property.In addition be sure to include an understanding of who pays for major capital replacements (not just maintenance) such as replacement of the heating and air-conditioning units, water and sewer lines, electrical mains, roofs, glass, etc.