My PM in turn has forwarded me the pictures and asking me what action would I prefer them to take.

If your tenants are especially cost sensitive (as all inclusive rent would imply) they will keep a sharp eye on usage.

It's great that your buyer's agent in AZ was able to inspire you to take action!  

@Russell Brazil Thanks for the advice - I'd like to charge her for the stress she's giving me and with her delay games even if it goes through we will now have to rent a month which will also incur extra moving charges so there will be a monetary loss on my end at least 3k for her actions in this matter thus far.

My question is, if they fail to follow through with this deal and the house goes to auction is legal action possible?

HI Darrell, You can certainly make offers sight unseen, however, it's a good idea as a newbie to go and see it for yourself as everyones opinion of a cosmetic rehab is different, however, if you already have buyers that purchase in that market and you know their price points for purchase, make the offer and then it can always be tweaked after inspection if necessary.Good Luck and remember to take massive action as that's how you learn! 

If the collection agency finds the particular debt to difficult or deems it unworthy of their efforts then you are just left there sitting without any action on your behalf.

Make them responsible for everyone's actions as much as possible.

You should reach out to them to see if you can get them to bring the account current, but don't delay eviction action for any reason OTHER than full payment being received.  

@Joe B.DON'T do it now you lose the "stepped up basis".And tax laws may change, so always run the proposed action by your CPA.