I think its a foundation issue unfortunately.

There are lots of reasons why the person isn't getting a loan even though they have that much cash: could be maxed on the number of loans (10 usually). credit issues, contractor (1099) employment, etc  It can sometimes help if the buyer can provide a credit report to make the seller feel more comfortable.Good luck and welcome to BP!

I am in the due diligence phase and the initial inspection showed some plumbing issues and leaks and I want to understand the scope repair and get a estimate.Would really appreciate if anyone can please recommend a good plumbing contractor.Will send out the details about this deal once I get it closed. 

If you lock it up and give an EMD, go see it and find major issues, you may lose your deposit.

I second George's comment above, since it was premature distribution your 401k plan must issue 1099-R to you and pay 20% tax.

There is a 7 day or so delay for cozy, but I don't find this an issue at all (at least for me). 

Will the bank have any issues with the second loan? 

    @Jason Werner  I am also living in China, same city as @Brian S. and have been working on the same issue. 

We have been looking at a few duplex properties, which are going quickly in the area.Here is the issue we are facing...

If the park will still be overpriced when you have to pay the piper, you will have a major issue on your hands.