That's My Clients EMD!!!!!!

Why do agents try to hold on to EMD's that they know rightfully should go back to the buyer???? My client put an offer on home with a 7 day inspection contingency. Needless to say my buyer was dissatisfied with the inspection, this was expressed to the listing agent. The seller (s) said they will make no repairs or adjust the sales price of the home! OK now my client has the right to her full EMD back, right? Right!!! So why did I receive an email from the listing agent stating if my client does not want to go through with the transaction they will need a mutual release with the EMD going to the Seller. WTH!!!

My response:

"I will contact my client to see if she still wants to proceed, but why would the Seller keep the EMD? We did the inspection in the time allotted, notified the seller of the dissatisfaction with the inspection and we did not sign the contingency release for the inspection. My client if she chooses not to go through with the purchase legally has the right to declare the contract null and void and have her EMD returned to her. Hopefully we can make this a win-win situation for everyone and close this transaction."

These types of situations in RE can be soooo infuriating. Pleeeease give me your take on why some listing agents behave this way? I did however speak with my client yesterday evening and she has decided to purchase the home, but it does not make this situation any less frustrating especially when I know this is something that can very well happen in the future. By the way I am in Michigan, I know laws are different in other states.