The house we wanna buy is close in price, so if we do sell and pay the capital gains we won't have enough funds to buy the new house and also pay off some personal loans and other things.1031 exchange is out of the question, since we never rented the house and we are not willing to....What do you guys suggest we do in this case?

We can accept funds right up to the actual eviction and the Sherriff will still evict, because we won the right to evict because the tenant violated their lease, not because they owe us money.  

The brokers says she does not want to release Funds to seller before work has been made and paid for by the insurance.

I suspect I have paid close to a million in wholesaler fees I just don't deal with them personally at the street level. but I do see their fee's on the huds I fund.. but its Highly regional.. out east were you live much more prevalent than were I live.. in fact where I live its illegal and the state is starting to send out cease and desist and fining those selling real estate without a license..

I guess it can be consider contingency funds?

Your equity is reducing your possible returns not increasing your cash flow.If your father has no use for additional income he could leave it where it is and not care if it is impacted in a market shift or he could pull it out and invest in a income fund or a REIT. 

Have moved on to better options since (IMO) Crowdstreet, Realcrowd, Fund that Flip and others.Suggest you search the forums, there are a fortune of threads on this topic.

I'm over 59 1/2, I want to buy a home with Traditional IRA funds since I'm elibible not to take the 10% penalty  but would take such a tax hit now since I'm still working.

Some sellers may also ask for proof of funds to make sure you have the down payment and closing costs in your account.This is how you can do it yourself... if you'd like someone to help facilitate this offer for you, I'd reach out to a local real estate agent.Please feel free to reach out.. 

Don’t ever accept a personal check for the initial move in funds.