UR yes I have actually had that happen twice in pretty recent transactions. One was a short sale and the lender did indeed reduce the sales price to the appraised value. The other was a relocation and that relo company indeed lowered the price to the appraised value as well. There was nothing unethical about it at all. Both RPAs had an appraisal contingency and in both cases the homes did not appraise so my clients acted accordingly.

Actually I see nothing sketchy about it at all.

sdr had an interesting post about accepting offers as a listing agent for short sales in which accepting the highest offer may not always make sense if the property is not going to appraise at that price. Now, if the highest offer is CASH and the buyer has waived the appraisal contingency, well then it is another matter.