I can compromise somethings, like location and distance but not the opportunity to buy a house.

Now we never compromise on our criteria.

This is an option and it is up to the lender to allow work to be performed.You may have a default in your contract by the seller as to performance, I suggest you not sign any contract modification as you could compromise your standing in your contract and end up having to start all over.

I was not willing to compromise my construction level and decided to just sell the remaining lots.

I apologized and reminded him that I had made a compromise to allow him to get the better deal and not have to pay the egregious 5% commission that was now attached to our deal.

This will give you the comfort level you need and add to your operating capital while not having to compromise your objectives.

Otherwise, I'm really compromising my cash on cash return. 

Maybe you could force them into a compromise?

Sometimes you can make a good compromise to live where you want as well (ie-not necessarily the best investment, but you can live somewhere you wouldnt be able to otherwise). 

Splitting the cost could be a good compromise, like @Shawn Thom said.