Mediation without legitimate cause

[Michelle Tucker]

Would greatly appreciate some advice. My partner and I put an offer in on a house in Pittsburgh. We terminated the contract within the timeframe based on electrical and heating issues that were found in the inspection. We followed the letter of the contract but the sellers have now requested mediation. We had been so certain that we wanted the house, that we put 5k down as hand money- which was above what was needed.  Though the mediation clause was clear in the contract, I can't wrap my head around potentially losing any of those funds - From my understanding of mediation, the goal is to 'reach some agreement' - regardless of the actual scenario that has taken place- in other words, the facts. 

Has anyone dealt with a similar situation? Any advice would be appreciated.