In addition, the fact you don't understand about a contract is a huge red flag to the lenders.

Usually I am good at detecting if a company is legitimate or not, but this company doesn't seem to have any big red flags..

I have a pretty good memory, the most common red flag is inconsistency in statements.

After we accepted the offer the buyer refused to have credit, bank or employment checked (red flags). 

I'm obviously no expert, but that seems like a red flag. 

If that's nothing unusual and it won't raise red flags to IRS, it will work.

One of the hardest parts of being a real estate professional is properly correcting the expectations of sellers whose expectations can be way out of whack, they start to see red. 

It will raise a red flag that you're from VA and not using one though.

I am thinking that the zoning red tape would be difficult to revet the building back to a duplex.

A few red flags in the small amount of detail:#1 - showing up in a car with "all his stuff" - I know that people hit the skids and things get away from them, but someone wanting to make an impression would have handled this a little differently. #2 - leading with not paying rent - he's admitted he's skipped out on rent up front.