A bad appraisal can make a house seem like it's worth less than it really is. Independent sellers may not agree with an appraisal, asking whatever they'd like for their home. A bank typically requires an appraisal to give a loan for a home, as with most mortgage lenders. So what happens when a person can't get the money for a home, because the seller is asking more than the appraised value? What can you do if you think a seller is asking too much for the property?
A buyer can ask that the seller reduces the purchase price of the home; this is not a simple solution by any means. Sometimes a buyer may agree to do so, but it's unlikely. If the market is strong, then there could be other buyers with the money for the full purchase price.
However, if you're the highest offer or have keen interest in purchasing the property quickly, then this may work in your favor. On top of that, if the building hasn't been appraised with your lender, then it's possible it wasn't appraised high with another. This new appraisal from your lender now has to be disclosed to any buyer who approaches the seller for the purchase of the property, putting the buyer in a position to make a good offer and to make the seller consider it.
You can also choose to meet the buyer half way. Perhaps you can offer a little more for the home, and the seller can reduce the purchase price to meet you at an affordable price.
Source: Orange County Register, "A bad appraisal: How buyer and seller can compromise," Allen Buchanan, Jan. 24, 2016