First Deal - Falsified MLS listing

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Hi All,

I'm in the final stages of closing on my first investment property, a tri-plex in the midwest. I want this deal to work given the dynamics of it. However, things have gone awry the past few days:

The MLS listing states the property is a "non-conforming legal triplex." However, the the appraisal came back $35k lower (~15%) than purchase price. This is because the appraiser found the property is not, in fact, a legally conforming triplex, but instead a single family. The seller, who is also the listing agent, didn't fill out the paperwork to grandfather in the triplex, and it's highly unlikely he'll be able to do so.

Due to the above, the deal is likely to die as the seller is unwilling to drop the price given the appraisal.

Since the seller falsified the listing, can I have him repay the money I spent on inspection / appraisal? I've asked my lender and he said I would easily win in small claims court as the seller (the agent) misrepresented the MLS listing.