What do you think a deposit is? A deposit is an initial payment and a promise that, if the item is held, the person who paid the deposit will pay the rest of the asking price. If that person does not pay the rest of the price, the deposit is lost.
You can't give someone an arbitrary amount of money to hold something for you indefinitely and then expect them to give you your money back when you renig.
The OP has held the item for months because he thought it was sold. That's time that the item could have been listed. That's time that potential buyers that could have bought the item spent buying other items that were actually on the market. That's wasted time and, potentially, money that the OP can not get back and it shouldn't be free.
If I put a deposit down on a house, keeping the owners from selling it for X months, and then had the audacity to tell them I changed my mind and I want my deposit back they'd laugh me out of their house and they'd be right to do so.
The OP asked if he should just give the deposit back and relist and I said he should because I assumed the options were to either do that or continue to hold the gun... if keeping the deposit and relisting is an option, then, by all means, do that instead.
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