A few other points:
The verbal agreement you and the seller had doesn't count. In real estate, agreements MUST be in writing in order to be enforceable.
And understand the seller's position. The seller wants to sell. He'd be willing to sell to you and you did have first shot at it. But your offer contained a contingency, and your offer got kicked out when a better one (without the contingency) came in and you declined to remove your contingency.
Check with your Realtor. I'd suggest you sign the release of earnest money. Right now, from your description, the sellers have agreed to accept the other offer. In fact, they might already have a ratified contract on it. Your earnest money isn't doing any good sitting in someone else's escrow account. Ask your Realtor what you should be doing in order to have your offer be the backup offer.
Hope that helps.
We are getting questions like this every darn day.
The Buyer's Agents costs you nothing, but not having one can cost you a lot.
Go talk to the Title Company, they have should have your money. You did give the money to a Title Company, didn't you?
Good lucjk and may God bless
Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
Where is your realtor?
What do they say.
Some contingent offers have kickout clauses, which means if a second offer comes in you have X amount of time to remove your contingency. Not sure if you had this or not.
If you don't have a realtor you need to hire an attorney to write your contracts.
You should request the title company release your earnest money.....please tell me you did not give it to the seller directly, but depositied it in an escrow account at a title company.