Can I back out of renting a house?

[Joshua D.]

I have a house that I am fixing up. I have a Deposit to Hold agreement signed with a prospective tenant, but no lease has been signed or executed. They signed the deposit to hold agreement, and sent us a check. We have not deposited the check, because we are now considering flipping the house to sell it. 

Am I permitted to not follow through with renting to them? I haven't deposited the check they sent, and in my mind, a deposit to hold agreement is just that- an agreement that I will hold the house for them to rent, and not offer it for rent to anyone else.

Is it legal for me to get ahold of them and let them know that we have decided not to rent the house, but to sell it, and that we will dispose of his check, or send it back to him, at their request?

Opinions welcomed.

Thank you!