Home Seller Tricked Us - Is this legal?

[Yash Patel]

We signed a contract to purchase ($700k) home and entered into escrow. The home inspection showed a lot of repairs, so we decided to cancel the contract. My realtor sent “Cancellation of Contract” to the seller.

The seller called us back saying that they are willing to fix the repairs if we are interested in moving forward. We decided to move forward and ordered an appraisal. The appraisal came at $660 and now the seller is not happy. Our contract stated that if the appraisal comes lower than the contract price, we will pay an additional $10k over the appraised value. In this case, it is $660+$10=$670. Now seller is trying to use the cancellation notice sent by us earlier against us.

Seller’s agent’s response after appraisal: “As you're aware the Buyer cancelled this escrow on 12/23/2021. If your Buyer would like to resurrect this transaction the Seller is willing to at $700.”

Buyer’s agent’s defense: “You are correct that we sent in a cancellation on 12/23/2021. However, you reached out via phone and asked us what we could do to keep the transaction going. In "Good Faith" we retracted our cancellation. I have an email correspondence with you from on Jan 7th stating "We are back in play with this file". We conducted the appraisal to proceed with the file. We provided the lender everything needed to prepare for loan docs. So to reiterate, the cancellation was not finalized AND was retracted. Technically, the seller would have to abide by the contractual obligation of the RPA and honor $670,000 for the purchase price.”

Seller’s Response Back: Seller added their signature to the cancellation notice that we sent them by 1 month ago. Told us that the contract is canceled.

Is this legal? Can the seller back out just like that after all of the activities we did?