Colorado law that states the the lender has to have the appraisal paid in full within 30 days, and then add the HVCC laws that say the lender has to use a appriasal managment company of some type. This put the idea of the seller paid appraisal in conflict. If for some reason the deal didn't close, the lender then would have to TRY and get money from the seller (and no chance of that since the contract is dead). And since the seller would then never pay, that leaves the lender on the hook, and again Colorado law states the appraiser has to be paid within 30 days. So because the lender will never want to be on the hook for the fee, they will require it to be paid by the seller, and assuming the deal closes the buyer would get a credit at closing.
Note one thing, even though you, or the seller in this case, pay for the appraisal, it still belongs to the lender. You are entitled to receive a copy of it, however, it does not belong to you.
Just be sure that you see this in your settlement statements.
There are initial expenses that must be paid...like appraisal and inspection. These individuals are business people who would like to be paid for their services. If you terminate the contract, they will want to be paid...
You have a "credit" at closing for closing costs that will include the appraisal but not the Inspection.
Most lenders want the Appraisal paid for up front. If the deal dies then the Lender needs to pay the Appraiser and with a good amount of deals dieing now this is becoming the Norm.
I hope that helps! Keep in mind I do not know how your sales contract exactly reads so I am basing my answer on how I would typically write a contract when asking the seller to pay for the buyers closing cost, including the appraisal fee.
I hope this helps!