If we sell it to them and the market goes down the next day, we have lost equity, but the asset should still perform based on our numbers unless rents also take a hit.If rents go down significantly, home values drop significantly and operating expenses go up significantly there are some MAJOR global issues and we are all screwed anyway. 

You can potentially pay yourself for services that you perform - It may be a wash or potentially at a worse off situation(if your rental losses are suspended).Salary to yourself is income.

One post I've seen perform well is something like this. 

If a Cost Segregation Study had not been performed on this $7,100,000 winery located in Napa Valley, California, it would have had first year depreciation of approximately $182,000.

Past performance of the fund is attractive, and since I want maximum growth and not monthly income, the fund facilitates automatic reinvestment of monthly interest for compounding of my investment.

ANALYSIS -Gross Rental Income = $70,200Vacancy (10%) = $7,020CapEx (5%) = $3,510Management (9% of effective gross) = $5,687Taxes = $3,442Insurance = $2,848Repairs (6%) = $4,212Snow = $600Heat = $4,929Electric = $3,343Trash = $652Water/Sewer = $1,500Operating Expenses = $37,743Debt Service = $16,406Net Operating Income = $32,457Cash Flow (after debt service) = $16,051 or $1,338/moPurchase Price = $265,000Cap Rate (of purchase price) = 12.25% Cap Rate (of price + rehab) = 9.55%Total Cash Needed = $66,250 + $75,000 (rehab costs) = $141,250ROI = 11.36%Final analysis - While this property isn't the fantastic homerun deal you hoped, it is still a reasonably good investment assuming your rehab costs (which are just estimates) stay under $75,000 and you can come up with the cash out of pocket to perform all necessary improvements to the property over the next few years. 

It is a market where the investor can perform heroics if/when needed.

I’m reading in CA the seller has to submit a request to perform and you have 48 hours or they can decide to cancel or can after keep your Ernest deposit.

I am just worried they sue for performance which my understanding is a long and lengthy process and often results in little success. 

The whole story of performance is wrapped up into appreciation and reversion/sale assumptions.