How to ask a seller for a price reduction after house is under contract

[Stephen N.]

I recently got a house under contract from an individual seller who is motivated to sell.

It's a long story but basically he bought the house about 15 years ago with the intent of fixing up and he never was able to do it.  Now he's tired of fooling with it and just wants out.

here are the numbers:

PUrchase price: $185,000

Estimated repairs: $125,000

ARV: $400,000

When i originally got the house under contract I assumed the repairs would be around $100k and the ARV was $425,000.

however, based on estimates for the work that needs to be done I believe $125,000 is a more accurate number for repairs and the ARV was too high because the actual square footage was lower than what i thought it was. I assumed the sq footage was what was on an old MLS listing for the property but it turns out the actual sq footage is about 300 ft lower than what was on the MLS.

Based on the higher than estimated repair cost and lower than anticipated ARV, i really don't feel comfortable doing the deal at $185k. I am considering either walking away or asking the seller to come down to about $170k.

My question is how should i approach this with the seller without him thinking I'm being shady or trying to take advantage of him by asking for a lower price?

should i just bite the bullet and just pay what i agreed to pay? 

Any help would be appreciated.