How should I go about asking for a reduction in his fee % on next 8....and so forth?

If it's not insanely overpriced, I'd take the listing with the understanding that we'd go into price reductions at pre-arranged intervals. 

Your agent should be advising you to have professionals provide quotes for all the needed work in order to draft an inspection objection asking for a major price reduction based on the estimates you get.

Total rent cost scenario = rent due every monthTotal own cost scenario = PITI due every month, + utilities, - interest tax deduction, - principal reduction, - avg YoY appreciation/12, - forced appreciation (if you fix it up.)For example, a completely made-up scenario where the numbers are made-up but demonstrate a very real principal:Total rent cost scenario = ($1500) Rent = $1500 true internal monthly costTotal own cost scenario = ($2300) PITI + ($250) utilities - $150 interest deduction - $450 principal reduction - $300 [2% YoY/12months] - $150 [Assuming $9,000 of value added from improvements divided over five years living in home] = $1500 true internal monthly costOnce you've calculated your total liability for each scenario, then you should weigh out the non-tangible benefits of each:Renting - increased mobility, limited responsibility for repairs and things, lower up-front out-of-pocket cost.Owning - Net worth of owners across the US has been shown to be much greater than renters. 

But it's nowhere near the 50% reduction you're assuming.All that said, once again, that's just me.

Keep your eye on the ball which is price appreciation and mortgage balance reduction.

If I buy at a discount and add value hopefully I can be in an ok position if there is a major reduction in value.

From today's news release:For the first time in state history, the Governor has directed the State Water Resources Control Board to implement mandatory water reductions in cities and towns across California to reduce water usage by 25 percent.

Not likely - there are a handful of issues, here are a few:Lender can't get title insurance on a project that is currently under constructionBuyer can't get title insurance for a project currently under construction *I say can't but, maybe can with a lot of paper work, bonds, lien waivers, etc.Too much risk in knowing if the builder can finish if already in troubleThe lender for the builder isn't going to release units without some principal reduction, unless building with cash.Your father would be much better off supplying a loan and in return getting the units - although there is a large amount of risk here based on the builders ability to finish.If the project is 12-18 months from completion, it cant be that far along and the builder is already hurting - that is bad news.

In the 80's there was a reduction in the Rate of increase (derivative of increase if you're a calc guy) - but there still was an increase (all while rates were going up).