Question on seller backing out...

[Thomas Loney]

I'm in the process of purchasing a home and have a purchase agreement signed by both parties. Specifically, the contract states the home will be purchased at $125,000. The problem is, the owner agreed to let us move to the property at the beginning of November. So we have been living in the home, and recently the bank we are going through appraised the home for $95. Now the seller is refusing to sell. 

I was hoping to get advice on how to deal with the situation. I know we can't demand the guy sell for less than the home is worth, but it is rather that he allowed us to move into the home before this was finalized. This is my first home, so I had no idea what is involved before jumping in. 

The contract does stipulate that both parties agree to a mediation if there is a dispute before taking legal actions. What are my other options? Besides paying rent, hiring a new appraiser, or going to another bank?