Appraisal lower than purchase price?

I made an offer on a short sale property 4 month ago @ $580K. I paid an appraiser to do appraise two month ago around 575K. Now I got the bank approval and working on loan. somehow the current appraisal came out with $535k on the property "AFTER" I signed the contingency waiver removal. I know I am stupid. Now I can NOT get the loan, since the appraisal is too low. And I also stock on my $10K deposit. Can I negotiate with the seller, countrywide, to lower down the price. Or can I just walk out and take my deposit back?? Please help. Both sellers don't wanna help on this case, they just want me to change a lender (their recommended lender). What should I do?? Thank you so much