ocr you still have the contingency period to back out if you want. Also if the property has sustained substantially more damage then when your client submitted the original offer then you have valid recourse to submit an addendum to lower the price, get credit for repairs, or simply walk. If these damages happened without your knowledge then you cannot be expected to eat the cost. The short sale lender may not see it that way but the listing agent would either relist at a reduced price or try to sell it at the same price with little or no luck. So the listing agent would probably try to explain the situation to the negotiator. Whether the negotiator could convince the investors to accept the reduced price is the real question.