From our perspective, someone being "difficult" isn't necessarily worth breaking the deal of a home we plan to have for 5, 10, or 30 years. I'm sure that we all deal with difficult people all of the time, and I just don't jump through hoops to cater to someone else's issues. I generally respond to drama by being calm and letting it burn itself out.
I think where it DOES become a deal-breaker is when either:
a) Someone does something that is (or borders on) illegal
b) Someone does something unethical that makes me concerned for what ELSE they might pull later in the deal
c) Someone has an unrealistic view of their home or the market, in which case, it's easy to quickly establish everyone's "final" offer.
In negotiations, we weren't going to go five rounds. They refused to consider our initial offer, so I countered by skipping the BS and went to exactly where I knew we'd end up in the absence of competing offers. Arguably, I went in 1% beyond what I expected they'd accept, more or less as a good will gesture and to let them know we were making an effort.
Ultimately, without clear undue pressure on either party, it really came down to the pure math of doing our own appraisal. Look at comps, come up with a reasonable price per sq. foot, adjust for things we'd need to put money into, adjust slightly for downward pressure on the market, adjust for comparable value of the features, and there we were.
I also created a spreadsheet of known asking vs. sale prices in our area and established both the typical percentage and the $ amount under asking.
In the end, I think we will have gotten a slightly better part of the deal, but both parties were at risk when speculating what is going to happen in six months. If home values decrease significantly, it will have been a "good deal for this moment in time," but possibly not for the future.
I **will** say that most of these homes were priced $200k higher and have been adjusting every six months, so we got more house than we could have in the past.