[Alan T]

It sounds like the big mistake here was the "handshake deal" part of it. I've only bought two houses in my life, but in both cases we were warned until there is a purchase agreement and money put down, the house is still on the market. I remember on my first house purchase the real estate company came back right before we were to do the purchase agreement and said suddenly another bidder showed up offering more. I played chicken and just said I would walk away. The other bidder suddenly disappeared later that day.

My personal thought is if you already had some handshake agreement that you were happy with, you should follow it through. You can hedge your bets all you want with buyer B by offering to show them the house, but make it clear that there is already an offer in on it to them.