Also, Realtors, while many are trustworthy, have an inherent flaw in that the higher they value a house, the more they potentially could get in commission.

Lesson #1 Buy at a better price.Lesson #2 Don't over invest/rehab items.Lesson #3 Set a reasonable rehab budget and expect way more issues to be uncovered as you go.We have to get passed the "if we were living here, what would we like" because we aren't living there and I like things to be pristine and aesthetically pleasing.

I do have a decent screening process and uncovered that their reported income was nearly twice their actual income.

Especially on older properties There can be lots of things uncovered.

The new generation of Smartkey don't have the same flaws, but they are vulnerable just like any lock.

You are right; that formula is flawed. 

It's not unusual to see structural integrity lost when walls are removed within units as well as more sinister construction flaws.  

Their final numbers are only as good as their info and methods to evaluate that info....what if both are flawed?

Bad faith in uncovered damages?

People connect better with people they can see.Work the buyers and ask the right questions to uncover the hidden sellers.