Help!!! Buyer Backing Out of Sale!

[IndySeller]

What is the name of your state? Indiana

Help!!!! We are selling our home FSBO. We had initally thought that the process was going smoothly-- we had a signed purchase agreement (with 90 day first right contigency) and passed the home inspection with the exception of minor repairs. During the home inspection, the buyer was happy that everything was going so well. However, a week passed, and we did not hear from the buyer. Therefore, I called the buyer to set up a time to go over the inspection report and to negotiate repairs. At this time, despite that we (the sellers) agreed to pay for 90% of the repairs, the buyer stated that she could not afford to make the repairs. For example, we did not agree with the inspector that a termite survey was needed, as no termite damage was found in the house (his recommendation was based soley on the fact that some older homes in the area have had termites). We also did not agree to have the slop of our landscape graded, as there is no inverse grade and there is no evidence of water damaging the foundation. We faxed her a list of repairs that we would be willing to make, but have not heard back from her (as she will not return our phone calls). She has now default on the 14 days allotted to submit her written request for home repairs.

Here are my questions....
1. Are we entitled to her earnest money? Her money is being held by her broker. We only have a copy of the check.

2. The buyer stated that she still intends on selling her home and moving. Her home is still on the market. If she sells her home to a buyer, and has not been released from our contract, isn't she still required to follow-through on our purchase agreement??

3. Does the failure to have a specific degree of slope away from the home constitute a "major defect?"