he told me that Washington is a private land(hard to buy) or something like that but it seems that my affordable price range of a house is 40k :( sounds to bad to begging with. so ill need my wife's credit score even that she do not work to improve that issue and also He needs her SSN(true?)

IMO the situation could be improved a lot by 1) advertising that the unit is in an owner occupied building and 2) not having your sister initially show the unit.  

A home can sit and sit and sit and sit, until the seller either make more improvements which they usually never ever do or drop the price.

Theoretically, over time, the buyer's credit improves and, when they can get a mortgage, you get paid the balance.  

You are elephant hunting with a BB gun, you need to get out of the jungle and learn real estate.Your questions are so vague they can't be answered without writing several books.Land is always valued with the market approach unless it yields income without improvements, then the income approach may also be considered. :)

The air handler/coil is a 4 ton and the AC and heater are 3 1/2 ton. 

Do we make any improvements/repairs or don't bother since they're in the house and happy? 

The county has to notify any mortgage companies of the pending tax sale and if they choose to do nothing then when the tax deed is issued the mortgage is wiped out.Pretty much the only liens that would be senior to a tax lien is a IRS or State income tax lien.All other liens are wiped out when the higher priority tax Deed is issued.I also have a good working relationship with my county officials.

The important part is to prevent warmer, moister air from traveling to cooler surfaces where it will condense.

I've been in Real Estate since Oct 2009 when I purchased my first home as a rental shortly after getting out of the military (Air Force).