I say this as much for other peoples benefit reading along, as for you.

The benefit now may seem nice of getting that money, what could you do in the next 6 months to year that will increase your income for a life time and have higher returns, and the ability to grow massively instead of singlehandedly focused on something that would lose you money now and later down the road. 

Also, timing those improvements can be very advantageous to you for tax benefits and additional cash-flow.

Reason for this is so the person not on the mortgage and title can take advantage of the first time home buyer benefits in the future.

I need to determine whether or not moving faster (by pulling from the 401k) offers greater benefits than patience and continuing to simply save the money needed for the initial investment.

REI has the benefit of Leverage (no margin calls, as long as you lock in your Debt) and Tax Avoidance.

Do not discount the benefit of appreciation. 

Go preach your benefits analysis to those people.Smart investors know the value of a home based on comps from the local MLS.

My main concern here is structuring the vendor takeback in a fashion that benefits both parties in order to make the deal happen.

I guess 401k's the only benefit of a 401k is it's tax benefit and I'm making an instant 100% ROI with the match... but the issue I have is that my money is tied up for the next 40ish years (I'm 28).