Ok, so I have a buyer for the land contract, now I'm a wholesaler and I am used to putting properties "under contact" which prevents the seller from accepting any other offers and makes them obligated to sell to me and to me only.

The reality of a 2 plus hour commute prevented the move though.Though you call Lynchburg a smaller market the changes in the twenty years I have known the town are amazing.

I would just have to borrow extra if I were to pay 20% down, which would prevent me from paying the mortgage insurance.

That means a suit was brought and successfully prosecuted.Insurance does NOT prevent lawsuits!

How do you prevent at the trustee sale of the 2nd bidding up what they will pay.

It prevents these and other issues.

I do not charge them or collect the money so I'm out of the equation.My 2 cents Unfortunately, the law prevents you from charging any fees during the application process, not just the lease itself.  

If you do, then the first one that gets their hold deposit in gets it.I think it helps do two things. 1) Creates a sense of urgency for them to make a decision.2) Helps prevent me from losing good tenants because I am able to act fast.I don't like the idea of collecting applications for a period of time.The risk there is that the good ones might be accepted somewhere else.

They also have had the precedent to prevent rentals in the neighborhood.  

You learn this after the first law suit and documenting everything and being totally honest will not prevent all lawsuits, unfortunately.