It’s not simply a case of the seller not wanting to sell their property for less than the market value. He’d agreed a sale to the FTB, and at a price which allowed for the saving in estate agency fees, based on a recent valuation. Morally, the sale should have gone ahead as agreed.
I agree with HowNowBrownCow that this was a dishonourable decision, and I would tell the vendor, a relative, how I felt about it. I would then base decisions about my will on his response, not necessarily taking things as far as disinheriting him.
The young purchaser has been badly let down.