It's hard to say without knowing the specifics of your transaction. From your question, it doesn't sound like you have an agent representing you. If you can't work something out with the seller, and cancel, I would seriously consider getting representation before you enter into a contract on another home. If the seller agrees to $10K in closing costs, that shouldn't be too big of an issue. Your closing costs really shouldn't be too much more than 3%. The $5K in flooring is tricky. They're just going to give you $5K in your pocket. Lenders will rarely allow that. Is it new construction? In new build situations, you can sometimes finance flooring. Another option is trying to work out an escrow hold back on the flooring. Some lenders will allow that. If none of those options are available, I agree with Dan. Ask the seller to reduce the price, so that you are still getting what the seller agreed to (their bottom line doesn't change, if anything, all expenses based on purchase price i.e. commission, title/escrow fees, will go down a little), and save for the new flooring OR get a credit card (AFTER closing, don't ruin your loan approval!) and put the flooring in yourself.
Feel free to call me if you have any other questions.
Real Estate Broker/ Realtor®
McAllister Homes Real Estate
Residential Sales & Property Management