Yes, in fact, I just went through this with a buyer. They will most likely reduce the appraisal and you (and your lender) will be stuck with that figure. At that point, several things can happen; you'll want to consult with your agent thoroughly about the details and options. Basically...
-you pay the difference, in cash, out of pocket
-you request the seller to adjust their sale price by the difference: they may or may not
-if neither you or the seller makes up the difference, the deal dies
You'll want to assure you have an 'out' in the contract, if you decide to let it go because the seller won't reduce, otherwise you may lose your earnest money deposit, if applicable.

Kim

Disclaimer - I am a licensed real estate broker in the State of Ohio