I want to put only $10 down so as to bind the contract but I don't know where to put it.  

You can put contingencies in to cover yourself, but you're playing with the seller's emotions by presenting offers that you may have to back out of.Even without an EMD, there's a decent chance that if a seller signs your offer (the act of acceptance), you could have a binding contract. 

Does the owner know you are walking away with 40,000 but is okay with it because he is in a bind?

Many years ago, stock brokerage had fat commissions.   

Save the money for a year or two and start looking for a "fat pitch."

My concern is that real estate makes a big fat target for increased taxes in the future.A raise in capital gains taxes will hurt the 'appreciation' folks.

The agreement spells out that you do not have an agreement with anyone else (brokers,fee takers,etc.) that would junk up the deal.This is why it is important to use a buyers broker for commercial more upfront than mid-way or back-end of a deal.You can make LOI's fully binding on all parties, or parts of the LOI, or nothing at all.Having said all of this the reason they want you to see the property is I have had talks with other listing brokers on commercial properties and an out of state investor or out of the country gets here and then decides not to move forward.The exercise wastes a bunch of people's time.

I signed a representation agreement with her, is that binding in the sense that I cannot work with any other realtor in Houston?

If you're using a "home grown" contract, I would suggest putting in something to the effect of:Inspection Period: All parties agree that Buyer has 10 days from the date of binding agreement to perform his due diligence and inspections ("Inspection Period").

I also have a nice fat $80K HELOC that I use to help fund investment purchases as needed just by going and asking for a check then paying a modest 2.25% interest only payment while the money is out (nothing when it isn't).