Thanks everyone for your opinions. OK, so here's what happened this afternoon...

Hubby and I discussed the situation.
When we talk to them I am the talker, but it is on speaker phone so hubby can listen too. (He likes it that way ) He felt that I was not clear enough last night on the fact that we would gladly accept their first offer of 4000 less. He also thought they didn't make it clear that that first offer of 4000 less was off the table. I thought it was clear of course, but I agreed w/ hubby to call them and just ask for clarification.
I got to talk to the woman whose brother will be buying the house. I asked her clearly if the offer of 4000 less was off the table or would they consider it still. She didn't answer the question and went into this long story about how she and her brother have been arguing all day about this. According to her: she does not want him to pay cash for the house bc it will drain his savings. She wants him to let them finance some of it for him and he put some down. He is now refusing and says he wants to pay cash and he wants to pay 9000 less. She says she is trying to talk him out of buying it all together bc she doesn't want him to spend the cash. She says if he will do it her way then she and her husband would have some say so in the deal, and would have encouraged him to take our counter of 2000 less. She said she thought it was fair and we were doing what we could. But that he wants to do it his way, so they don't have a say so in how the deal goes down. And more stuff, they have been fighting over it all day, blah, blah, blah. She says that they like our house the best though bc it has all the things/features they were looking for. She ends by finally saying, "So I don't really think that 4000 less is off the table or not and we don't really know if you can do 9000 less." To which I replied, "Please let him know that we would be happy to accept his first offer of 4000 under, but that we just cannot accept 9000 less bc it will not work for our financial situation. We want to make this work, but 4000 less is the absolute lowest we can go." She said that she understood and would talk to her brother, then get back with us. I don't really expect to hear from them until tomorrow. The woman is very sweet and seems perfectly reasonable. I feel inclined to take her at her word that what she says about their situation is true. They are just the middle man. I think the brother is being unreasonable and apparently his sister agrees with me, lol.

I think we were really fair to do some normal haggling and ask for only 2000 under the asking price. Especially when you take into consideration that the asking price now is 16000 less than our original asking price. They knew that too. We explained to them that we had gone as low as possible. We have been dropping it a little along as the months went on and we weren't getting any bites.

My anxiety has been off the charts today worrying about this and I had numerous meltdowns at work today, but I am feeling calm again bc the ball is now in their court again. My husband is happy with what I said. He thinks we have done the right thing, and really all we can do at this point. I think I am feeling like we did the right thing too. Not 100% because my anxiety makes it hard not to analyze and doubt, but even if this whole thing goes south I'm not going to beat myself up bc I think this guy acted out of character for a normal haggling procedure. I don't think we could have predicted what he did.