Discrepancy in sq. ft. - how negotiate?

[Henley H.]

We have a home under contract and just received the appraisal, which indicates the home is 400 sq. ft. smaller than listed on the mls.  This represents a 13% difference in size.  The inspector did not measure sq. ft., so this is the first we're learning of the discrepancy.  

We made our offer based on a home that we believed to be 400 sq. ft. larger and would like to negotiate the price/ask for a credit/something similar to make up for the misrepresentation.  The agent is representing us as well as the sellers.

What is the best way to move forward and negotiate due to the smaller sq. ft. and what is reasonable to ask for?

Thanks!