Like I had some moral obligation to accommodate a buyer who couldn’t fulfill the contract.  

This discussion seems to have devolved from the original posters question, where can I find financing, to an analysis of potential over leverage, contract option outs, and the morality of entering a contract without having the money in place.the most important question to me is : is the seller doing the seller financing of $700,000 insisting on a 1st position lien or is he willing to subordinate to a small ($245,000) 1st and accept a 2nd position?

This is always a legal vs moral/ethic/customer service debate....You have met what the law requires you to do.....stuff happens and things sometimes are out of your control even with your best effort. 

This advice could get the LL sued as I know of no jurisdiction where it is legal to charge the tenant for normal wear and tear.It is also why there is an anti-LL sentiment and terms like slumlord.Terrible advice because it is illegal, but it is also morally wrong. 

Quote from @Mario Morales: @Steve Vaughan does this apply only to STR I asked about getting umbrella coverage on my multi unit and I was told I couldn't get it?

They believe there is a moral obligation to pay one’s debts.

The moment you get greedy is the moment that karma is going to take everything away from you because you don't have the ethical or moral mindset to do anything besides what's in your favor. 

@Jason TimmermanNice responseBut you can't be mad at an elderly person getting a better offer on a deal you were never going to close yourself Oh and to the moral warriors - would it have been different if he were going to buy it himself at that price?  

When I had one, he could run the comps, help me with pricing an offer, and give me some moral support! 

Moral of the story - develop skill and add real value to people and you don't have to live in fear of your words and actions.