US Dept. of Justice on Realtor Rebates        https://www.justice.gov/atr/rebates-make-buying-home-less-expensive         https://www.justice.gov/atr/competition-and-real-estate-state-31                                                                  FREC (Florida Real Estate Commission) Rule 61J2-10.028 paragraph (2)The sharing of brokerage compensation by a licensee with a party to the real estate transaction (i.e. the buyer or seller) with full disclosure to all interested parties is not considered a violation.Facts: Seller Concessions to pay for Buyer's closing costs and prepaids are NOT the same as REALTOR REBATE. 

Expect the numbers coming from the owners to be padded somewhat, you'll have to compensate for that when you calculate your offer. 

The only way that'll happen regularly is if you compensate them for their time when doing walkthroughs once you have a property under contract.

Also how does compensation typically work?

You really just need to start somewhere, make mistakes in the analysis, and rebuild your spreadsheet to compensate.  

I can't imagine him not being of the mindset 12/6 for the first deal and 12/4 for the second.No experience, low FICO, and no cash reserves... what are the compensating factors here?

If you do decide to take on the current owner's problem, make sure you are very well compensated with a sizable price reduction to reimburse you for the time, expense, risk, and headache of evicting them yourself, however I would not advise going this route.

That way they still get compensated for their time (via a referral agreement between agents) and efforts but you also receive the expertise of a local agent. 

When looking at any investment that veers hard off course and is pioneering new territory you have to assume that the amount of risk increases tenfold - therefore the potential return should compensate for that risk.

I receive no compensation from them of any kind.