Did the other buyer pay any earnest money deposit?  

They had $1,050 on deposit.The property manager did an inspection and then prepared a letter to the tenant detailing all of the charges to be taken out of their deposit.

I normally do move-in fees in place of security deposits here in Chicago.

Wanted to survey all the multifamily managers out there and ask them how much of the actual unit turnover costs do you deduct from the tenant security deposit?

Is there any way of not placing a deposit down on a potential deal?

The tenant is asking for the deposit back.

RENTAL TERMSI respectfully disagree with @Robert Marston on his security deposit statement:"It is my understanding that you will pay first/last but not an additional security on top of that unless you have a pet." 

We performed the move-out inspection and had to withhold $200 for cleaning and repairs.We sent the tenant the remainder of the security deposit as well as a disposition of deposit showing the deductions.

If your Lender makes you pay (them) for MORTGAGE Insurance (eg. if your deposit is very low), then yes, THAT Insurance is "just for the loan".

No plans to rehab, they'd just put down a deposit during a sub-development construction phase with the believe that (at complete) they could rent or sell them for a profit.