A listing languishes on the market. The original list price is $400,000, but it is gradually reduced to $350,000. A buyer makes an offer for $400,000 with a $40,000 down payment. However, the offer has a condition based on the acceptance of an addendum that requires the seller to give the purchaser $40,000 in cash after closing. This little detail is "withheld" from the lender. Is this legitimate?

If the differences between prospects are insignificant then following the practice of first come, first served makes more sense.