I will add. that your agent once you have put it in contract has it as pending and in some MLS systems it will say it has what we call a bump clause.. but for whatever reason buyers wont waste there time.. so no one ever comes in and try's to bump it..

In fact, if the tenants aren't destroying the place, a good case could be made that the property is better served by having someone in it than having it abandoned, as empty houses don't fare well in the long term.

The tenant currently owes approx 1200.00 and by december 31 when the current order expires will add approx 1800 more so 3k isnt worth going to Fed Court and the local authorities wont intervene.

I wont be house hacking.

Again, hopefully that wont be as much as an issue but something to consider.Good luck!

Thanks again for all the replies.I went back through the contract and riders that have been produced thus far, and after speaking again with my attorney, it seems to be a case of the sellers attorney stating that they wont renegotiate based on the appraisal and we have to move forward with the sale despite the appraisal, and even if our mortgage is withdrawn because of the appraisal.

Still, at this rate, I wont be able to buy a house for 80 months.

Many will say that you have a great idea and that's the greatest thing for the world and environment....and I wont say its not but you do need to think about a return since cash flow and equity is a large part of why many people get into this business. 

Basically he's willing to hand over the equity he has in the property in exchange for not having his credit destroyed and a foreclosure on record. 

Excessive debt interest can destroy cash flow.