I do not want him to drop dollars into the house if he doesn't need to. 

My daughter has enough spare funds to pay the rest so it doesn't have to be financed and then I could transfer it to her but is that a good use of her funds rather than leveraging her cash?

If you lock yourself in with an agent, and that agent doesn't perform to your standards, and you go to another agent, your previous agent will be compensated even though you didn't want to work with them anymore. 

Doesn’t seem right at all

I’m meeting her Monday and was told as long as another higher offer doesn’t come in I’ll know by Monday.

The owner is a friend of the family and just doesn't want it anymore and doesn't care to make a profit. they are very well off anyway. 

However, if my intention is to use the equity from said HELOC/Home Equity Loan as a down payment on a rental, doesn't it make more sense to take a fixed rate Home Equity Loan so I am not subject to the adjustable rates of a HELOC?

Reason for this as follows: You control the input and make sure it's real, you can also explore scenarios to see if the deal work, i.e. 220k sales price doesn't work, what if we sold at 230k, would that work (make sure to check market will support you explored changed variables)?

He'd be a perfect guy to talk to, and he doesn't live too far from you. 

You have more than 5 users (which doesn't apply to your case)2.