It depends on what you told the guy when you took the deposit, sort of. I always (after being burned once) tell the buyer that if he changes his mind for any reason, the deposit is not going to be refunded. Maybe you did not do that, but since he changed his mind and bought something else he can have no real expectation of you issuing a refund. I think I'd be inclined to keep it--a deal is a deal, until he broke it.