earnest money refund

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Question for the BP community. What are the conditions that allow a buyer to get their earnest money deposit back during the due diligence period, if they decide to back out of the deal due to issues uncovered during inspection? 

Example: House under contract. Inspection and walk through with contractor reveal significant decay/rot in parts of the subfloor (likely due to a previous bathroom leak). If buyer asks for concessions on price to fix the problem (since it was not known about when the offer was made) and seller refuses, can buyer back out of the deal without losing earnest money?

Any and all advice is appreciated. Thanks in advance.