Other things in his LOI were that we grant another option, that we refund the security deposit, that we allow unlimited assignment without us granting consent, etc..I'll go with your option #1 above and simply decline his other proposed changes and see if we can preserve the Renewal concept at a new rate that bakes in his commission (and then some) - if he wants to earn that commission, let him go and sell the package to the tenant.  

In the past I have asked for a higher deposit but I just dont want to deal with any potential non payment issues nor evictions. 

That's what deposits are for to begin with.

Demanding I sign a document saying the house is in better condition than it was when they moved in, etc. and I must do a walk through with him, and give him his 2K deposit back.

Most require a cash deposit and if you don't close for any reason the auctioneer is keeping it.

Hi Dasha,Very cool to see someone 16 years old on the BiggerPockets forum with an interest in professional life and investing time into their future rather than endlessly scrolling through social media videos! 

If we take the opportunity cost of money approach, if you have $40k in cash you could either put it on a deposit in a secure bank, earning around 5% per year in a very passive way.

I would also ask them for a double deposit as well or maybe a non refundable deposit :) 

They already collected security deposit.

Note however, as of October 1, 2023, Connecticut Landlords must return tenants' security deposits, with interest on the deposit, within 21 days and not 30 days.