I know here in SC you can file the paperwork for only $110, so the cost isn't really prohibitive.

What you're describing is actually prohibited by the IRS.

Rather, I'd say banks were in a position where it was prohibitive to foreclose.

Barring some unusual local laws prohibiting it, the three elements required to form a contract would all be there - offer, acceptance and consideration.Still, I think his best option is to get a strong agent and list it.  

I know of at least one structure to do this which passes IRS muster, but it is likely to be prohibitively expensive:Form the LLC Draw up a promissory note from the llc to the IRAStructure the note as a convertible bond with a fixed interest (which can be adjusted by mutual consent)Note converts to equity upon sale (equity kicker)Hurdles: I believe this is bank dependent but common...IRA will have to own less than 20% of the equity so as not to be on the note, so the IRAs interest received should work out to about 50% of the return minus the 20% in an equal partnershipUBIT will need to be paid in the financed portion (not awful)Bank needs to be informed and agree to the bond being in second positionYou will likely need an IRA custodian sign offDon't try this at home!

I guess it comes down to how much time I'm personally willing and able to invest while having a family and full time job and if the stretching of the time from purchase to re-sale would be cost prohibitive or not... just so much to learn.  

Banks strictly prohibit this.

The reality is, if it is NOT a RESPA transaction there is no federal prohibition, so you have to look to each state.

The clause says they may pursue a deficiency unless agreed otherwise or prohibited by law.

Further, you don't provide much info on the "flip" house (when you bought it, how much you paid, what improvements if any you made) but there are also rules governing -- and in many cases prohibiting -- FHA financing of houses that are deemed to be a "flip" In fact, FHA guidelines even use the term "anti-flipping".