I guess the other way would be to quit claim deed the property, deed and note, to my MAIN company that I will keep open, right? 

For future AZ investors, don't put more than $2500 earnest money down on your offers because $2500 is the limit for small claims court in AZ and any more money it gets complicated.....

He is a seasoned contractor, and when I worked in that space, we have actually completed projects together.

$8k was to have a licensed electrician complete the project.

I have been involved in releasing government liens on many occasions to complete sales but this scenario is outside of my wheel house.

However, even if I purchase at this price, I could "live" in the basement and live COMPLETELY rent free.

They completely overlooked the 7' ceilings throughout, steep shallow staircase, and minuscule master closets.

For every property we have, we complete a sheet that has over 160 different materials that we plan on using on the house.

Be completely honest with them and if they don't want to work with you, it is better to walk away and lose the deal than to give up your integrity.Besides, they probably don't care, they just want to get their house sold, and if you're giving them what they're asking, you shouldn't be ashamed, you are doing everyone a service and collecting a fee.

Take them both to small claims court.