For what it's worth...
I smelled a rat too in this unfortunate situation.
I had been speaking to Justin about the machine during the afternoon yesterday, and we even discussed the offer price. When he told me later that the seller had second thoughts and was likely going to back out, I was skeptical that the seller was pulling a fast-one.
So, I called the seller myself, even before Justin published the link here. To my surprise, I got the exact ditto answer that he told Justin --- that they were handed down from his deceased grandfather, that he was initially ok with the price until he told his Dad what he was doing, and his Dad asked if he wanted to sell his Grandfather's possessions without even knowing what they're worth, etc. He also said he should take the ad down from Craigslist. The one thing he did NOT mention was having had done $300 worth of work on them.
He went on to say "I had an offer of $400 or $500 but I don't know what they're worth". I think the guy has visions of sugar-plum dollar signs in his head. It was very clear to me at the time that the machines are still for sale (the ad still being on C/L supports that) and that the seller wants to find out what he can get for them, and is doing exactly what Justin surmised - not standing up to his original deal.
I went on to explain that I felt I had a good idea of what the machines were worth, and I mentioned a bit about our club. I said "To 99.5% of buyers, these machines being over 50 years old are worth NOTHING. To perhaps .49% of buyers, they may be worth no more than any other used old washing machine, which is nowhere near $400. Its just to our relatively tiny club that these would hold any value, so don't expect a stampede of four-figure offers to flood in over the next weeks." He seemed like he actually understood that as he is interested in 1950s Lincolns and knows that value is limited to the realm of collectors.
So, with that, I guess we'll see what happens with these. It took the Pink 1963 Ladies I got about a year to re-appear for sale at a more reasonable price, presumably after the seller found out that there wasn't a legion of buyers ready to shell-out small fortunes for an old machine.
Gordon