Hi @Anthony Portugal,Nothing jumps out at me, except that you are posting this on BP because your LO apparently doesn't think it's important enough to make time to explain it all to you... that doesn't bode particularly well for how it's possibly going to play out once in contract and paperwork is flying 100 mph!

1) Do I write a letter to the seller explaining why I'm backing out of the contract?

I explained to him that she signed a year long lease, and that there were penalties associated with breaking the lease early.

My biggest issue so far is no being able to explain seller financing clearly enough to the seller because it is my first time in this situation. 

Rick Rucker and othersCan you explain how loss(negative) affect rental schedule E.

But the look back for the sec 121 as she explains is 5 years.  

I was reading the reports a while ago and there is part where it explains what factors raise and lower my score.

@Meghan McCallum - I am an agent working only with people buying 2-4 units in Chicago.  75% of my clients are "house hackers"I explain to them there are four things people want.  

What kind of language would you use to bring these big, expensive issues up in my letter to seller and explain that because of them my offer will be lower?

I believe it only becomes illegal when you change your screening process and criteria for different applicants and you reject based off of a discrimination.You can do what you explained above but then you have to do that with everybody you rent to in the future that has the same situation.