Agent misrepresented listing by 250sf

[Sarah Buchanan]

I was set to close on a house today (currently in it's redemption period of foreclosure) but the appraisal last week discovered that the square footage had been listed as more than 250sf over actual, taking the price per sf from $74 to $86; still ok but not nearly the deal I thought it was.  My plan was to rent for a few years with an exit strategy to sell at $100/sf in 3-5yrs so this changes my anticipated gain from $50 down to $25.  I tried to counter to a $78 per sf but seller won't budge.  Seller will lose the house to foreclosure if I don't purchase by Oct 6 so I'm surprised they won't concede but in the meantime the basement just flooded so I'm ready to walk away.  My realtor believes it's still an ok buy at $86 per sf and my numbers still work ok but not nearly as well as they did before.  My biggest hang up is that I don't trust the realtor and don't want to work with someone shady.  Thoughts?