I would still retain the security interest, which is completely different than ownership interest.

In the world of reputable qualified intermediaries the intermediary must retain your proceeds until there is no longer the opportunity to complete an exchange.

If she doesn't, you can give the required notice to end the M2M, or be more aggressive if she doesn't stop smoking.Plan to spend extra time and energy getting the smoke out of her unit, hopefully the M2M is written such that you can retain her deposit to help offset costs.

There are separate fee structures for each component (taxes/bookkeeping and legal), and you pay a fee up front and then a monthly retainer.

For this, since you seem certain that the tenant will pay and therefore take less time, you may want to ask to put down a 1K retainer (it seems to be the number these attorney think it will cost) and you pay an hourly rate, which you negotiate. 

Are lenders who are asking for a "retainer" or "due diligence" fee a real thing? 

How do you keep and retain good tenants?

• Is the LA or SS negotiator normally privy to the value assigned by the BPO agent or appraiser retained by the lender?

My attorney is asking for an up front fee or a retainer to be applied toward closing my short sale/wholesale deals.

I'd suggest you check with small and regional banks that will hold your loan in portfolio or sell it and retain servicing.