US - OH Buyer backed out after inspection frivolously

I had a buyer offer 12k over the asking price on a VA loan. It felt too good to be true but it was high enough over asking price that we rolled with it and stopped showing the house per their demands. Today the seller just backed out after inspection even though there were no real issues citing that " she felt the house just didn't have enough space." I felt like there was some bullshit here given that they were using the inspection contingency to back out but not citing any issues with inspection. It puts me in a bad position because this house had offers immediately and she wasted a week of my time.

My realtor is telling me this is completely legit and the inspection clause is a "wide open door" to exit the transaction but I wanted to field some opinions? Is there a way to filter these people out who treat putting an offer on a house like buying some junk off FB marketplace? This is probably going to cause me to have to lower the asking price as now the house has been on the market for a while and there is a failed sale.