While the market appears promising, it does seem to come with higher prices, rising HOA fees, and increased competition.

They have said to send over a competitive LOI and they'd consider it (on tax rolls for ~80k, small rural town). 

Keep this in mind when calculating potential profitability.Research active and potential competitive rentals in your intended market near Gatlinburg, not just through AirDNA, but searching booking platforms.

If that were true the various real estate niches would have almost unlimited competition and profits would head toward 0.  

I am not looking to waive the inspection but what other options can I present that people have used which makes the offer competitive.

So competition is high.

Are you fully booked but maybe not charging as much as you could or are you failing to fill your calendar (maybe you're not pricing competitively enough).If you aren't booking up your property then a tool like RankBreeze could help you increase exposure of your Airbnb listing while also doing some of those strategies Mike suggested.

Luckily the personal referral had the most competitive bid and ended up going that direction.

It is EXTREMELY competitive and the margins are very thin, so the more expense you can mitigate the better.

What about the competition?