Anyone familiar with real estate law ?

In my opinion, you have no contact. One of the contingencies in your contact should have been financing which the bank won’t approve due to the lower appraised value. Your options should be to either come up with the difference in cash and go ahead with the sale or mutually dissolve the contact and get your earnest money back. In the case of dissolving your contact you might get lucky and the seller might drop his price depending on how badly he needs to sell the property. Frankly, I’m not sure why you’re not discussing this with your Agent rather than on this Forum.