We have placed offers on 3 houses so far and have been totally out bid by other buyers.

Work with another wholesaler if you haven't got a buyers list. 

I went forward and signed a contract with a buyer through bank financing.

I'm assuming you have a 5 year agreement with your seller to you though.3 - $500 for a buyer option con. is pretty low. 

We had a buyer sign a contract with a non refundable EMD.

Here are the basics of the deal:Buyers are asking $59,000ARV is ~$100,000Repair estimate is just shy of $25,000We settled on a cash offer at $40,000The buyer is gun shy and does not want to deal with counters after inspections etc.

Something you may want to try is contacting some local wholesalers buy calling the number on bandit signs or "As-Is / Cash Only" postings on Craigslist and explain what you are looking for and ask to be added to their buyer's list. 

Anything that hits MLS is going to sell at near full-market value because there are so many buyers out there and the competition is really stiff.

A cash buyer is better because the seller doesn't have to wait for financing to come through and any hoops the bank makes everyone jump through to close.

Not cool to lock up a property hoping you find a buyer, wasting the owners time (and money if they have financing on it), and getting their hopes up, just to walk away 30 days later.