Reason 3 is especially bad for owners.

Likely the reason why you got this off of a tax deed is that the prior owners determined they couldn't do anything with the land either and quit paying the taxes rather than throwing good money after bad.

For several reasons. 

Address each comp the bank used and explain why it's not a good comp, and then provide your own with your reasoning as to why they're better.

Any reasonably qualified 1031 company or CPA should be able to walk you though this.  

In my experience, there is always a catch on deals like this  - not that the deal isn't good, but there's likely a reason you're getting this great of a deal.  

However, this is not always the case due to a variety of reasons.

The lender, or loan servicer will also charge legal fees and “reasonable” processing fees.

I am very comfortable with this deal for obvious reasons.

I took one on my primary residence, paid no origination fees, and make no payments on it unless I use it, and only pay $70/yr maintenance fee, so if I never touch it over the life of the HELOC (10 years) I'm only out a total $700 in 10 years, which I think is reasonable for the access to the cash.