Some cities don't for example allow garage conversions, but plenty of people do them, but that could be an issue in the future, for example if you do more work and need a city inspection, let's say for electrical update, and inspector determines all the other appropriate permits were not pulled or inspections done. 

I'd do some research on builders who are building what you want to build and then just start to have conversations, see their past record, etc., and then hopefully you could make your decision from there.  

@Cathy MalmroseAll else aside, your son is essentially a landlord for this time and he could put together a lease agreement immediately (ideally with the help of an attorney), which outlines a security deposit in case of damages, requires the prior owner to obtain renters insurance, who pays utilities and any daily rent- especially a daily amount that’s high if they stay beyond a certain date.This would at least cover the primary points in a leaseback.I’m curious about when and how the sellers made the request to stay past closing that your son agreed to - was it just between the two parties or was the Realtor part of that conversation?

We have a lot of money we can deploy but I can't seem to find anyone even willing to have a conversation about selling.

You also have vacant office buildings that don't get the foot traffic they use to and a demand for housing, so conversion is natural. 

@Nate Sanow Agreed, the Vermont Market is nice on money conversation in some of there more densely populated areas, but the cost of repair and age of homes makes it a hard sell.

As far as picking the right market this is always a tough conversation on bigger pockets.

People who do not understand this within an hour of conversation such as whats in this few minute comment are usually people to strongly avoid.

I'd welcome further conversation.

Very creative approaches, I do like the conversion into a duplex type house.