Terminating a contract to purchase a property

[Kay Swor]

Hello everyone

I'm new to investing and unfortunately put a house under contract to purchase.  The first comps were from a different neighbor hood (often mistaken as where we were looking, according to the owner) but we did contract under those comps (this was before knowing it was wrong neighborhood)  After contractor came out, gave us bids, we reran comps...our 3 day contingency had expired and we find the comps were wrong very wrong.  

We have tried to wholesale the deal, sell as a rental, etc.  We cannot come up with the cash financing to continue the deal, no one will lend on it.  

We have been told repeatedly in seminars on investing, if the deal won't work, terminate the contract.  Well, we requested a survey, they had 15 days to produce one.  They did not.  The title company sent an email requesting survey...added another 15 days still no survey.  So we sent a termination notice.

They are now threatening to sue us.  Any suggestions, ideas, etc.  We clearly do not have 80K to pay cash on a house and cannot get anyone to lend anything towards it.

Help...desperate