We also don't know if it's a short sale or a foreclosure which also mitigates the type of deal you can hope to make.
Too much for us to try to give you answers, Dan. You need to consult with someone in person. Call a couple of agents and explain where you are and see if they will agree to help you. It might not be too late for them to get involved.
Talk to your agent and your lender - they should be able to provide you with more guidance for your situation. At the end of the day there is no guarantee on what may or may not be an issue until the appraisal is complete and the Underwriter has reviewed it. Sometimes there is risk.
If you do not want to or cannot afford to lose a house due to a negative appraisal you may want to consider whether you should go after this house at all, though depending on your price point all houses may have similar challenges.