Appraisals are... What they are. I couldn't get a VA loan 16 years ago because they were looking at the house as being part of a rural area to its northwest. We, the builder, and lots of the town's population, saw it as a bedroom community annoyingly far from a city to the south. It was priced, and we were willing to pay, according to the higher market. So we ditched the VA mortgage and got a different one.
Storming away from the counter offer does sound unreasonable.
Xist's sister's initial offer should not have been the absolute highest she was willing to pay. Just like with Craigslist, there is no real THIS IS THE PRICE. It's a market. CL charging a nominal fee for listings will weed out the most pathetically childish sellers, but real estate is already expensive enough to deal in. By the time someone lists a house, they've already put a lot of time and money into it. They're serious. Xist's sister looks like a traditional CL lowballer wasting everybody's time.