Second, is there legal action that the tenants can take against my wife for illegally trespassing on the property?

*I have 10 years experience as a contractor, I am also able to complete a lot of the work myself or with a small crew because my father was a GC for 25+ years and started me in the trades young. * My wife is an interior decorator with kitchen and bathroom cad design experience, she is also a home stager and can help with plans and lay outs.* We have wholesale accounts with several large cabinet companies, and granite companies and can get huge discount on these supplies, along with flooring, roofing shingles, and carpeting and other supplies.* My personal credit score is 700 and I have personal rehab capitol, but not enough to cover the home purchase and rehab costs. 

I told the loan officer about the potential 'bait and switch' scenario (not a good idea since now I gave them information on how to back up their actions). 

Assuming they have access to trusted and more affordable contractors and I don't have to manage the rehab (as much) it seems like a fair trade off. 

Thus, the house had been used in A's trade or business or held for investment within the meaning ofCode Sec. 1031(a) as well as used as a principal residence as required under Code Sec. 121.

The easiest thing to do is to find a couple good subs, including a jack of all trades handyman and then oversee the project yourself.

@Bryan Sturman If the seller doesn't really have a situation where they want/need to trade some equity for convenience, and they are fine with paying a commission of 4-to-6%, as well has having open houses/showings, and likely the majority of buyers that come from the MLS will be using lenders (who make things very complicated sometimes), then they should list so that they can get every penny out of it. 

However, they have settled in to this property and are having difficulty taking action to get their primary residence ready to move into and getting ready to move out of this property.I have been trying to think of creative ways to make the purchase while allowing them some latitude in allowing them to stay for a time at least.

My biggest regret was renting and just living in my city for 6 years, taking no action.

Very pragmatic and actionable steps to follow.