Some underwriters may not care or ask, while others may scrutinize the situation.

To reiterate what @Matthew Olszak said, scrutinize the banks addendum if they accept your offer.

Would you recommend that or believe the IRS would scrutinize this?

If that doesn't fly, another option will be to go through a commercial loan broker or specialized lender who will look at the quality of the collateral to determine whether to make the loan or not, rather than scrutinizing your personal financial history.

They will scrutinize your material, layout, and contractors. 2nd, if any layout deviates from the original plan, you have to find a structural engineer to prove to them the change won’t compromise the structural integrity of the building. 3rd, your finished materials especially flooring must meet their sound proof standards.

After listening to lots of BP podcasts I am determined to scrutinize my REI deals even further to do all I can to cover myself

Until the HUD1 is signed by both buyer and seller, it's not "official" IMO.Sounds like you might have to closely scrutinize if when it does come.

They could (would) be scrutinized by state and federal regulatory agencies if not their investors and/or shareholders.

If they don't agree, then we've probably just let a rather weak and unqualified buyer off the hook.My question really all comes down to this: as a seller finance contract, are we entitled to scrutinize and investigate a buyer the same way the banks can?

Remember, when it comes to taxes, thoroughness and compliance are your best defenses against IRS scrutiny.No matter what tax advice you receive, remember that the devil is in the details, and the IRS will scrutinize your claims closely.