Newsflash: Buyer wants 3% EMD back after getting cold feet and deciding to continue renting [Michigan]

I received five offers, three over asking (two with escalation clauses). I selected this buyer due to them having by far the highest EMD at $7500 (3%), which was double to triple what the other offers had, and having the second highest offer (no escalation clause; $1000 less than highest with escalation). Both my realtor and I felt the much higher EMD was a very strong indication that they were serious about buying a house and worthy of foregoing the slightly higher offer that had a lower EMD.The buyer has the inspection done, and on the final day of the inspection period, buyer’s agent provides a list of items, the estimated range of costs for repair, and a request to have a plumber inspect slow draining sinks. Buyer’s agent sends a three day inspection extension addendum. I offer a concession and agree to the plumbing inspection and a few hours later the buyer backs out. Buyer’s agent informs the my agent (in writing) that the buyer is a first-time buyer, and that the buyer stated that they are overwhelmed by the purchasing process, that they recently started a new job, are a grad student, and that they’ve decided now is not a good time for them to purchase and that they will instead continue renting.The buyer’s agent sends a mutual release agreement stating that the buyer should receive their EMD back: “Due to a extended inspection period buyer will receive his EMD back. See attached purchase agreement and signed addendum for extension of inspection period. Will also include inspection reports as cause for cancelation of contract.”The contract has inspection, appraisal, and financing contingencies. No other contingencies are listed.Due to the buyer backing out, there are no longer multiple offers. Only one buyer is still available and they now are offering less than asking price, and $8,000 less than their previous offer (which is $10,500 less than the buyer that backed out). So I have to either accept a below asking price offer or relist the house and hope to get better offers.My agent says that they’ve never encountered a situation where the buyer didn’t get their EMD back, and informs me that I must agree to the mutual release agreement (and return of EMD) before the house can be relisted or another offer can be accepted (despite no clear clause in the contract stating this). I’ve declined to sign the release at this time and have reached out to legal counsel to review the contracts. tl;drBuyer wants 3% EMD back after deciding during the inspection period that they are overwhelmed by the purchase process, have too many personal things going on to buy a house right now and that they are discontinuing their search and will instead keep renting.