But I handled the condo very stupidly (I basically treated it as an ATM and lived above my means) and then had a job loss.

It MAY be slower than renting but it's still a loss. 

Death, divorce, downsizing, up sizing, job relocation, health issues, job loss, facing foreclosure, back taxes owed, etc.You want strong motivators for your investment of time.

So unless my numbers are wrong, it is operating at a loss.  

This should also give any buyer enough room to do the work that needs to be down and still not be underwater when they're done.Since we're going to be taking a loss of 20-30k on the sales price difference, I was hoping to be able to entice them (or another buyer) by providing seller financing.

I am compassionate for their loss, and also concerned considering their house is only about a half mile or mile from my residence. 

Gross Income you can either reduce your tax bill by the "loss" or if you make too much $ (i think the limit is AGI of $150K/yr) you write down the rent income to $0 and have a loss carry forward.  

So, if I have a total loss, my policy will only pay out 25% of the market or 'cash' value of the property?

Another thing is your probably experiencing energy loss also a house that age due to expansion and contraction or just simply the build.  

The property was still in bad shape after my minimal repairs and was about an hour from where I live so after my experience with bad tenant, I decided to cut my losses (even though technically I didn't have any) and sell it.