I'd tell him the original 2500 dollar deal is off. It should of been anyways, when you told him the situation and didn't want to sell it to him in a lesser condition than what it was presented as in the beginning.
Add on the parts/labor expense you think is fair and comfortable with. Tell him you'll give him the first chance at the new price, if still interested. Otherwise he is in no way tied to the deal. Can walk if he wants to, and tractor there for will be advertised at the new price, with no obligation from him if not I interested anymore.
For what it's worth, doesn't sound like he was real interested, cash in hand, knocking down your door to buy this thing. Sometimes those types of people are hard to get money out of, IF they do buy something. Might be a blessing in disguise if he says (NA, not interested anymore), and you sell it to somebody else that has the cash in hand, and more serious about buying it.
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