Walk away unless they want the house, in which case pony up the money.  There is no legal solution, you can't force the seller to reduce his price and the agreement sounds like it was never in writing.

looks for me like 1 or 2. 

4. can be to reorder the appraisal inspection with a different lender( unless FHA).

I do not see any legal issues per CA regulations. Both principals mutually agreed on the price and I assume the buyer knew that there can be a chance of a lower appraisal results. 

If I was the buyer, I would hold sellers feet to the fire. Sign the agreement split the difference or keep your damn overpriced house. So 1.

If I were YOU darling, I would be out showing my client his replacement property. NOW

Unless the buyer is ravenous for the house and willing to suck down his equity, in which case that would be an ill-advised 2.

Silly seller's driving with his manhood, may get run over by a truck and squished. He'll miss it. And you.

It's pretty simple.  The buyer can walk away and find another house, if they wish to start over with finding a new house, inspection, appraisal, etc.  Or they can agree to the price.

Sometimes just the act of sending over the release to the seller is an "oh, #$%^" moment for the seller, who realizes they have to start over and find a new buyer. 

It's nothing more than a game of chicken...and he who blinks first is out of the game.  If the buyer doesn't care about losing the house, then hold tight and force the seller to blink. 

It does not matter who did what or why...

Nope, an attorney is not needed either.

Buyer just needs to make a decision. 

Hopefully buyer will walk and seller will get a lower offer and have to pay closing cost on top of another short appraisal.

Eve

It depends on how low the appraisal is, whether the buyer can afford to pay the difference, how bad the buyer wants the house, how bad the seller wants to sell, whether there is any chance to readdress the appraisal or get another one, etc.

What will probably happen is both parties will stamp their feet, due to the "principle" and the seller will put his house back on the market, and the buyer will go off and find something else.

If there was a formal agreement, it must be adhered to. If there was a handshake, it should be adhered to. 

That's for the buyer to decide. Analyze the situation, provide advice and what you must do is follow the instructions of the buyer.

"SellIer refuses to sign the addendum.."   It is still the sellers house and they can choose whether to sell and under what conditions.

What should the buyer do?  How much do they want the house?

There is no legal agreement until an amendment is signed. Buyer can walk if they want, I assume under terms of the contract if property doesn't appraise. I don't know what legal solution there might be for the buyer unless the seller signed the amendment already. I can't say what I would do as a buyer's agent as I don't know enough about the history of this transaction or home values in this neighborhood. Did you have enough information to challenge the appraisal or request another one?

1 or 2 are possibilities. 3 is not, if the revised agreement is not in writing. Supose you could change lenders and get a new appraisal if conventional financing.

I vote 1.  

And I can't agree enough with Candice A. Donofrio 

Their choices are to pay all the difference, dispute the appraisal or walk away

Abide by the terms and conditions of the contract.  If they have a right to terminate and that is their desire they should proceed.

1 or 2. Depends on how bad they want the house, how much the difference is, and how much cash they have on hand.

If it's an FHA offer, #4. Remind the seller that this will be the appraised value for anyone and everyone that wants to buy with an FHA loan for the next 4-6 months. If it's a VA offer, #2 and be thankful someone took your VA offer in this market. If it's a conventional offer, tough call. Buyer has to make a hard choice between #1 and #2. I don't see how #3 is an option.

This is up to the buyer.  I'd say probably 1 or 2.  In Delaware, if the home doesn't meet appraisal, the buyer has the option to walk.  In this case if the buyer really wants the home and had the ability to make up the difference of the lower appraisal it would be their option.

If we had a verbal agreement I would ask, "what changed?"  I would be very dissatisfied with the other agent, who also may be frustrated with their client. 

It's the buyer's option, but chances are the buyer would be so sour on the experience, they would rather walk away than proceed with someone who is untrustworthy.  A seller who does this shoots themselves in the foot. 

walk away

Walk away. I don't buy houses for my buyer clients.

go find another house....

In a multiple offer situation in a hot market I would have required proof of funds in excess of the asking price from your buyer before accepting the offer.

If they dont have the money to pay these high prices then they should be looking at lower priced homes.

Would have been better if the seller just said no deal than to say yes and not honor it.

The buyer decides what they want to do. 

Challenge the appraisal.

If that fails, walk.  

These boots were made for walkin 

The buyer and his/her agent should have the appraisal reviewed, share "better" comps or some information that would not be readily available to the appraiser.

2. Come up with the additional difference. Will be #1 if they want this Home.

Option 1 if they could find similar or better. 

Follow the terms of the contract.

The agreed upon price is the right price.  The buyer has the right to cancel if they want to do so (unless this contingency was removed in the contract) and if it is not in writing it doesn't exist to it comes down to whether the buyer wants the home and can afford to pay the difference in cash.  Personally, if I were the buyer, I'd pay the difference since it only lowers the mortgage amount.

Seller is just mad & maybe needs a few days to cool off. Nothing worse than a hot head acting stupid. He either sells to this guy or he doesn't. I'd tell the buyer to give 5 days to the seller to sit on it & come to his senses. Then if they don't - get another house.

Given the situation and actions thus facr one has to wonder what would follow. Unless the buyer REALLY wants the house it's time to move along

If nothing is in writing, there is no "agreement"

Options 1, 2,  and 4 are open.

Option 3 is not viable.

Move on.

Use math on the wings of reason...Money in hand versus the pursuit of money are two different dynamics. Winning is not getting everything you want but instead....getting a win. How much of a win is where the risk is...

Walk away

I agree with Jeff. 

It is up to the buyer and how badly they want the home.

I recently had this very thing happen. I 'accidentally let it slip' to the LA that my buyers were coming back into town to take a look at the neighbor's house the following day. 

Miraculously, the sellers agreed to meet the appraiser's price!

No choice but move on unless the buyer is willing to pay the price. Due to the Statute of Frauds, unless in writing and agreed to by the parties to the contract, the buyer has no traction.

Dealing with a seller who doesn't honor their word and throws tantrums. What a delight.

An agent should always discuss the possible scenarios and options regarding appraisal well before the appraisal. Verbal agreements are interesting and mean nothing.

The buyer can and probably should walk away. If they choose to stay, they should prepare themselves for another tantrum if they request any repairs.  The seller is trying to make the buyer their bitch. Will the buyer allow it or will they push back or exit the contract?

A person's negotiating position is only as strong as their willingness to walk away.

Our area form states transaction is NOT subject to a mortgage. Most check that box to win the heart of sellers or to lose an opportunity. 80% checks that box. 

Depends on how much they want the house.

1 or 2. Curious . Did he offer above list price? Did buyer agent do comps for him ?