I feel the seller is playing games with me.

Maybe the play is to add 1000 sf at $350 a foot.  350K + 867K = $1,217K.  

However, I was playing golf with my attorney friend who owns a title company and he said that the Japanese Tax Code allows for 100% depreciation over 4 years if the apartments are mostly frame and are 25+ years old. 

Box 1000Chester, PA 19022877-322-8228 The credit reporting agency plays no part in the decision to take any action on your rental application and is unable to provide you with specific reason(s) for our action.You have the right to a free copy of the report within 60 days of receipt of this notice and to dispute the completeness or accuracy of any information in the consumer report issued by the credit reporting agency.Sincerely,Account Closed 

I also want to make it clear I am not someone that has hundreds of thousands of dollars to play with either.  

But I think that if you can calmly and coolly and methodically prove that the value is only $X, while he may reject your offer initially, so long as you maintain a decent relationship he will come back to you after it sits on the market for 6 or 12 months.Unfortunately, that is a waiting game you may not be willing to play and you will be dealing with somebody who is far more emotional than logical about the whole situation.

Appreciation may not even come into play when these people are purchasing.

If so, how did the mortgage come into play? 

I've visited your beautiful counter and even played some Tejo so much fun! 

@Zach Schwarzmiller   having lived in Napa ( Silverado CC) were many winery owners lived and I played golf with them for years...