I took over mowing there lawn and doing things around their home that they just could not do and I never charged them anything.

I assume that you have researched procedures and any applicable rights of redemption.  

Everybody is charging an arm and a leg these days.

If you have, then you could move to portfolio lending and get much better rates than private money would charge. 

Most attorneys will settle a transaction as part of their fee, but even if they charge a few hundred extra, the title company charges just as much typically for settling, so you're just moving that fee to another part of your settlement statement.

Lender charges a flat $500 fee.

I have used hard money in the past to fund my flips and I’m trying to avoid that if possible due to the initial cost of the loan (my hard money lender charges $1500 in fees at closing ($500 for appraisal + $1000 in “legal fees”, I’ve never gotten clarification on exactly what that is) Plus 2 points at closing.  

Think we'll just try to send in an offer letter with the quote from a previous submitted application, see how it goes.

Regardless I would keep taking applications until you can select the most qualified applicant which ideally will not be this applicant.Set your screening standards high.

If it’s a lower priced I always charged a minimum, which could be 6-10% just for the listing side.