TOTAL PRICE OF HOUSE$132,000.00 was the sale of the house (purchase price to you)Plus $6,931.17 Settlement Charges to Borrower (Commission)  3%?  

If you write the divorce settlement when you are both friends and not under financial stress or have had disagreements over the deal you will find it much easier to undo if anything goes wrong between you both as partners.

John gives a credit to settlement costs, a good way to avoid the financing issue.SLOs are really full of risks, what if your buyer wants to close and your seller dropped dead 3 days ago?

We agreed on a settlement date in 4 weeks and my seller has told me I can begin working on the property immediately.

We set an appointment, I like the house, we agree verbally to a price, he just needs to chat we his brother because some $$ will be due at settlement to satisfy the mortgage -approx 10k.I give him a few days to work that out, when we chat again, he says he know needs to do a short sale- Bc the brother will not lend them the cash.What can I do?

What I believe would happen is that any money your collect as down payment and anything that you have in writing as a credit toward their monthly, would simply show on the settlement statement as an overall credit toward the purchase price of the home, so they would essentially need to borrow less.  

You should have the whole pet fee to use in that case, not a prorated portion.I would just request that all collected fees get credited to you from the seller's settlement at close of escrow. 

I am looking at Flipping to grow a Personal Injury settlement I'm going to be receiving.

Did they teach  your friend and does he understand creative financing methods (hybrid offers, delayed settlement, front porch offers, 100% formula, split notes, vertical break up, principal mortgages - no interest, substitution of collateral, owner refi for take over or split notes)? 

It should be on the settlement and taking out of net proceed to seller.