Depends:
If what you have sold is a bargin to the buyer and you know it wont be hard to move on then yea why not, give the bloke his money back.
If you what you have is hard to move and you have been sitting on it for a while then i would contact all who has enquired about it and ask if they are still intrested at the advertised price. If they are then no loss and refund the bloke the coin
o the other hand if the previous enqirers are not intrested then i would discount the item by the ammount of the deposit you were given and on sell it keeping the deposit, so your not out of pocket,
But also it depends on the curcumstances and if its genuine.
I hate mind changers, you make a promise that it.
Also for the record the least he could do if your nice enough to give back the deposit is buy you a six pack to say thanks.
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