Those are good hacks to get better options than what you might get here, looking in a particular area.You have the right idea though, you want to give some sweat equity first or gopher skills.

If he says no, is my only option to back out and lose the earnest money deposit ($6,000) or go forward with the purchase, knowing I'll have a $3,000 - $5,000 bill or more if I decide to do this later?

EVERYONE has a different idea of what that highest and best use could be based on their experience and experience along with the AHJ's allowed uses in the zoning/probability of rezoning. 

Still options with certain lenders where there is pricing at zero points.  

The website allows you to input your properties/portfolio into the data base, and interchange different scenarios.

View report*This link comes directly from our calculators, based on information input by the member who posted.Newbie guidance needed........I am unsure if the Amortized numbers entered are correct since I was uncertain of the # of years I need to enter.Thanks!

Not every buyer is an investors and will not look at a property only based on numbers. 

My naive thoughts here are that people are motivated to sell or not based on certain situations and its matter of striking the right person at the right time.

My realtor mentionedan umbrella policy so I’m trying to understand why or when that type of policy makes sense   Based on this, I don't believe you'll need an umbrella policy then.

For your question you posed, two factors would influence my decision: 1) my opportunity costs - in other words what other options do I have at the time, and 2) My stage of life - at points in my life I have been willing to take a bit more risk, and have had bandwidth to take on that risk, and others I am not so willing to take the risk and do not have the bandwidth.