Last thing you want is a long and costly court proceeding. 

Any suggestions on how to proceed?

Almost every lender can do this, but most consumers either go with who advertises the lowest rates, or the lowest fees with little understanding that just about everyone can offer them what the other guy is advertising.

Of course I understand he wants me to make an offer so he doesn't feel like he's wasting his time and there is some money on the horizon for his work thus far, but I'm kind of stuck as to how to proceed.  

But it can most definitely get time consuming.

(b) Manager shall indemnify, defend and hold harmless Owner and its directors, officers and employees from and against any and all claims, actions, suits, proceedings, losses, costs, expenses and attorneys' fees to the extent resulting directly from the negligence, willful misconduct or fraud by Manager or its employees in the performance of Manager's duties hereunder."

Don't take a TSP loan to fund consumer spending; only for an investment you expect to make better returns than the TSP.

GroupMy wife and I are slowly proceeding towards our goals of being a buy and hold investors.  

Check with your attorney before proceeding.

If I was proceeding with the work I would talk to my RE agent about a contract agreement that locks them into buying before proceeding.