Hi Stephen,I was in a similar situation earlier this year.

But based on your personal (family) situation you may or may not be able to claim the "active real estate professional" status on your tax return, which in turn may have significant tax consequences on your taxes due.  

I have no idea about the roof situation but will hopefully soon!

What are your strategies for an initial offer, that I could apply to my situation?

I'm often not quite sure what exactly is meant, because they have pre-determined codes that might not fit exactly the situation.

However I thought I would post here to to document this experience for anyone else who might find themselves in this situation and to ask are we the crazy ones for standing our ground or is this the broker in charge from hell?

No complaints so far.Try to stay more on the north side as crimes are less there.It kind of a risk reward type situation. 

Details:Outstanding loan amount on the home is $187kPreviously listed for sale this year at $250kArea comps are around $300k and rents around $2000/moPhotos in sale listing show a mild hoarding situation and listing says house needs some workMy main question is, in a sale like this, if the outstanding loan balance is $187k, is that all the mortgage company is concerned with or are they looking to make as much as possible?

They most likely won't allow as high leverage as FHA in (1), but they'll be used to "unique" situations.

Do lenders standardly do short sale in the situation owner has passed?