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Should we back out after appraisal?

Appraisal finally came back, house was originally $339K and was appraised at $322K. Obviously the seller is very upset and even tried to submit an appeal (a word doc with bullets points on what they invested in) and it got denied.

Originally, they agreed to $5K in closing costs and $3K for repairs. They are some repairs that will need to be made such as a leak coming from the bathtub with a moisture level of 33%. There are other repairs needed but this is the main one. The house was built in 1988.

First, we asked for appraisal price plus $3K for repairs, they denied. Second time we asked for just appraisal price and they counter offered asking us to pay $3K and we denied and now waiting to hear back.

From our perspective, yes the house went $15K under overall but we are not getting any assistance on closing so most of our money will go towards that. This is a FHA loan. I’m not sure what their answer will be but after the first time, the seller’s agent already emailed the lender saying the offer might fall through which we obviously don’t want to happen. Would it be worth it to cut losses after technically losing $8K in total from what was originally agreed upon plus $3K so $11K in total? Or just back out?

submitted by /u/amiathrowaway420
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source https://www.reddit.com/r/RealEstate/comments/zy2kxr/should_we_back_out_after_appraisal/
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