Answered on Jun 09th, 2013 at 3:35 PM
In many neighborhoods, prices are finally rising, and the selling season has just started. Hope that your agent sells the house for more. Then you have no damages.
You mignt not have had a binding contract, anyway. The two most popular home sales contracts in California both provide for an inspection period and the buyer's right to terminate for any reason or sometimes no reason, until the expiration of the inspection perioid. Sometimes failure to approve the condition of the property constitutes an automatic termination of the contract. That might be the case here, in which case, the buyer didn't do anything wrong. Sometimes faiure to approve constitutes automatic approval and agreement to complete the sale. In that case, you probably have the right to sue the buyer if you end up selling the property for less than their price. Wait to see until you sell. Maybe you'll sell for more, not less.
Another option is that if the Buyer does not approve or disapprove, the seller can notify the buyer that he has 3 days to choose, and after that the contract is canceled.
In home sales, contracts where the buyer is bound and required to close escrow and can be sued for walking away are pretty rare. They happen and they are enforceable when written that way.
Even if you sell for a lower price, the difference may not be worth suing over. Lawsuits are time consuming, distracting, and expensive.