Selling without title-ing in your name is called, "jumping title." Not legal in any state.
If you sell before the title is in your possession, it's not usually a problem unless there is a problem. That is, when the paperwork finally comes through, you can finish the transaction, but the sale will ride on the "bill-of-sale" that you (hopefully) completed when the vehicle left your possession. That still doesn't satisfy title and licensing requirements.
Now, I have gotten away with getting a temporary tag just by showing a bill-of-sale, but I almost think that was an error on the BMV's part. It seems like they have always wanted a title in order for them to issue a temp tag.
All-in-all, your buyer won't be able to do anything without a title, and you won't be able to give him a title until you get an SF97, title it in your name, then "sell" it to him through title transfer.
Just tell him to park it until you get the title to him, or he's going to be trying to tell someone the old, "blah, blah, blah" if he gets pulled over or gets in a wreck.