Sorry to hear about your particular situation. I hope you do get your $5k back.
Is this home for you to live in or investment?. The reason why I ask is because if it's for you to live in, is it really worth it for you to back out now just because you think you overpaid by $10k? Assuming you will lose your $5k deposit and already spent close to $1500 on inspections, you're already out $7.5k… If you continue your RE search, the next home is gonna cost you another $1500 inspection, and you still might get cold feet. You're already going to be out $10k anyway. It seems like it would only make sense if you decide to back out and not buy for a long time because you think prices are going to fall by a lot and you're going to get a better deal down the road and you're going to wait for the better deal. If you're going to continue looking and actively seeking to buy soon, it's probably not worth it to argue over $10k.
Frankly, if I were in your shoes, I wouldn't be trying to get your deposit back.You did mention that you're at a stage when you have removed all your contingencies. Unless you waived those contingencies early, you had probably close to 19days to back out. And with the exception of fraud, something fishy with the inspection,etc, it seems like you agreed with the seller that you would think about this for 19days and beyond which, you agreed to let forfeit the deposit should you not perform.
From a sellers perspective, if I were a seller in this market, I'd be fighting nail and tooth to keep your deposit, especially because you cancelled after contingencies only because you didn't think you didn't get a good price after agreeing to the price. The seller's been in limbo for 19+days. Back when RE was hot, this wasn't an issue ,because if you backed out, chances are the seller could find a backup buyer. In this market, it could take months before you find someone else, let alone the physiological factor of "why is this house back on the market" issue that other potential buyers may perceive. Not every seller in this market is the stereotyped flipper, or over leveraged idiot. There are actually some people trying to sell for whatever reasons (job transfers, changes in family, etc).
From personal experience, when we were looking for investment properties out of state in 2005, and had put small deposits down for preconstruction. In all cases we backed out, we either did so before the agreed date and got a full refund or we just forfeited the deposit if we changed are mind after the date. Being that those "investments" were in florida and arizona, that was probably the best decision we ever made.
