It Makes 1900 per month.Do I walk away from this deal and forfeit the money I have put out for deposit and miscellaneous expenses or do I take the appraisal on the chin and take over this property in the negative?

I must, however, satisfy some stipulations:  1) my offer must exceed the previous by 5%  2) I must put 5% down with the county clerk at the time I make my offer 3) I have 10 days to close 4) If i fail to close I forfeit the 5% down payment and also am required to make up any shortfall between the eventual sales price and the original offer 5)  My offer can in turn be upset by another bidder or the original bidder.Long story short there are too many questionmarks for my taste at this point. 

Is all money pre-paid forfeit?  

I would forfeit my earnest deposit but I think I am more comfortable losing that than waiting possibly years for values to come back.

In other words, they have transferred the risk of cancellation - the forfeiture of their monies - to you, so that you forfeit the monies. 

If they have no case after talking to a lawyer, you could just tell them sorry but they can forfeit the deposit and move out if they prefer…

Losses are either applied to the current year or carried forward or sometimes forfeited.

My goal is to have 15-20 of these under management in the next 10-15 years; the long game on this will hopefully outweigh the opportunity cost forfeited by choosing the TK model. 

They are taking the risk, because if the deal doesn't close, they forfeit the capital.

We rehab and maintain bank-owned foreclosures, demo & rehab tax forfeited homes for the county, and flip homes for investors.