I recently received a copy of the title commitment which shows encroachment issue in the the "Schedule B, Section II - Exceptions". 

At this point in my opinion they have committed fraud and are entitled to government housing with 3 hots and a cot.  

It needed someone who was going to commit to keeping the integrity of the house.

@Mike Terry IMO Values dropping shouldn’t matter unless you HAVE to sell and/or you’ve committed to a mortgage payment that’s economically callous.

The current addendum says the 26.I have asked for a commitment letter from the bank the closing atty. claims the buyer only needs to show Inability to provide financing.

It is important NOT to commit to anything except to continue to explore an arrangement that suits you both. 

There are a lot of lenders out there who don't really want to commit time to you unless they know you're going to do a deal.

Although a Multi-family home would be more convenient for living, we are committed to a less desirable living situation for a year if it means we can house hack and live for free or turn a profit.

So, if your intention was to use it as a rental, doesn’t matter how long you live in it, if you obtain it under the guise of a primary residence you are committing mortgage fraud.

The few I interviewed were upfront about not wanting to manage such a property due to the time commitment it is (for them).