I can't imagine a seller would agree to cover the cost out of pocket if they are doing seller financing, unless they had money and were desparate.  

First, learn about ways to make money last, set your aims, grasp house hacking, check if you're ready money-wise, do deep market checks, make friends with local home investors, agents, lenders, and those who manage properties, go deep into property details, and get to know the local home laws well.

This is a very legitimate deal and quick money for the gap lender.

We also asked the seller for a price reduction to make the numbers work but the seller declined so we backed out of the deal and had your earnest money returned to you.

There are so many ways to make money. 

I have looked into some of the rules and it appears that I could not defer this money to a 1031 because at one time this was my primary residence?  

It's great to have you here.Here are some recommendations for you:Find and connect with other BP members that are in your area: http://www.biggerpockets.com/m...Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/a...Read Beginner’s Guide: http://www.biggerpockets.com/r...Check out BP Money Podcast: https://www.biggerpockets.com/..Wishing you the best

Or money back if not working or if I find incorrect data?

You will still be much lower than  new build.And faster too, and as we all know  - 'time is money'....

Do you lend your money or broker other peoples money?