Congratulations.No one can answer that question other than your CPA, because it is "case by case" i.e. dependent on the facts and circumstances. 

Under certain circumstances, you can expense property in the year of purchase rather than add it to your basis and depreciate it over a number of years.  

So far absolutely no issues with moisture and since there aren't chemicals being used in the water it helps overall maintenance with the pool pump and the interior of the pool room doesn't have as harsh of conditions/smell.Also, there will be things like self closing doors that are required (unless very unique circumstances which I could describe if necessary), pool alarms, etc, but that will be overseen by the local building inspector for the County, Chris Jenkins, and that'll have to be done or the builder won't get a CO.

I am working on sending them an acceptance email, but wasn't sure how to word it all because of our circumstances.

If you were going to finance the property and due to recent circumstances will no longer qualify for financing, that would likely be a valid reason for you to get out of the contract and be able to get your EMD back.

If after the closing circumstances change it gets chalked up to life happens. 

You can possibly be approved by the lender to move out between 9-12 months due to extenuating circumstances, but don't move unless the lender has approved it in writing, otherwise it could get into Occupancy Fraud?  

But you know that two elderly women living on a fixed income can't afford much higher rent.

I’m looking for information regarding how and underwriter would view these circumstances most favorably.

There are a few other alternatives to 1031s depending on your facts and circumstances as well.