Appraisal came back $5,000 lower than purchase price

I live in Virginia. We are purchasing a house and the loan is in processing. It is a VHDA loan. Everything is allright except the appraisal came back $5,000 lower than the agreed upon purchase price in the contract. The Seller's real estate agent is contesting the appraisal and asking for another appraisal. I am a little nervous about this because I wonder if she gets to choose the appraiser and if so, if he appraises it for the purchase price I'm afraid I might be buying a house and moving into it and automatically losing $5,000. What are my rights in this matter? Can I walk away and get all monies back? Can I insist that the first appraisal be used? Can I have my own appraiser appraise it for the third time? ANy help or suggestions would be most appreciated.

Kathy

[HomeGuru]

The appraisal of your lender stands unless grossly erroneous.
The Seller must agree to reduce the purchase price at appraised value or cancel the transaction.
Since the purchase is contingent on financing, the lender has the ultimate say.

I called VHDA and was told that the seller's agent could contest the appraisal and ask for another one. My concern is if the second appraisal comes in higher than the original appraisal, it hardly seems fair to me. Can I contest the 2nd appraisal? Can I walk away without owing anybody any money even if the 2nd appraisal meets the purchase price originally set?

[HomeGuru]

Direct your questions to VHDA. You need to find out what the correct procedure is in this situation.