Every cost they sent was right-on the $$$ or lower than expected.

You are simply much less competitive when you need to lower your offer by x amount to take into account all the fees on the loan...

Like most things in life, it's a double edge sword.Buyers benefits include being able to negotiate terms, lower down payment, not having to qualify for a loan with a bank (if you have issues preventing approval).  

@Carolaine S.I would definitely consider selling the coop and look for a multifamily in a decent part of the Bronx or lower Westchester that would work for an FHA loan.

First floor front entry into LR, with no closet at entry.

I'm no "pro" as well but I've listened to a lot of buyers in your situation end up in Option #4: Walk away for now and in time they may come back and accept your offer or in some cases accept an even lower offer. 

@John D.Depends on the interest rate you're paying, obviously the lower the interest rate the higher your return would be.

Recapture is the lower of the gain realized from the sale of property, or the depreciation deductions  taken on the business property .

Therefor you can find great cash-flow for less capital and lower competition from owner-occupants/flippers.Lesson to be learned is getting feet on the ground in those neighborhoods to understand the differences in product type and highest/best use.

This will hurt the lower income people that the rules was probably intended to protect.