Can anybody offer advice on how to proceed? 

If you use proceeds for personal use, the interest will not be deductible.  

The listing agent already mentioned to me they're in the process of taking the tenant to court to get him out so they can sell, that's part of what makes me think they may be more motivated by a low-ball offer.

Does anyone have any suggestions as far as how I should proceed?

Should I proceed as planned or sell the house 'as-is' to a flipper?

@Alex Verdugo Whatever they call the office where mtgs/deeds/etc are filed....here it is the county Clerk Of Court. 

It really comes down to what you are comfortable with, but if your agent is quality, he/she would have explained each item in detail and answered all your questions so you could determine how to proceed.  

A 1031 exchange is used when you are selling an investment property and would stand to pay substantial income tax on the proceeds because you are making a profit and/or recapturing depreciation.

Some people might even have a exchange setup where they sold a property and have to buy another property with those proceeds in a certain amount of time. 

You would lose if it came to a court case.