Seller want to pull back after clear to close

[Syed Quadri]

We put an offer on 2/19/2022 and it was accepted on 2/21/2022. Our contingencies were 12 days for loan, 12 days for appraisal, 7 days for inspections. The agent advised us this is the best way to get the offer accepted and we can always go back and negotiate the timeline once we are in contract. Inspections were completed before time and appraisal came back on the due date March 7th. Soon after the appraisal, our lender sent the documents for underwriting. We did not sign any extension or removal of loan or appraisal contingency, our agent did not provide that. Underwriting came back March 15th which is a day later than our initial scheduled closing date March 14th. We are set to sign the closing documents on March 18th which is Friday and that puts the closing to complete on Monday March 21st. Sellers sent us a demand to close on March 15th and gave us the deadline to complete the closing on March 18th. Our lender advised us that is not possible due to 3 day waiting period after we sign the closing disclosure and we cannot close on the same day in California after we sign the final documents for closing. Sellers would like to pull back out of this deal due to delays and our agents tells us that they have a better offer on the table and would like to go with. 

Note - This is a dual agent. We put an offer through the listing agent to get the house.  

My questions are:

1. Is there anything we can do legally?

2. If they do decide to pull back, what happens to the earnest money?  Do we forfeit since we are passed the deadline? 

3. Any other solutions ?

Thank you,