reality check

it depends....

who told you about the other apartment? do you believe them?

if yes, then...
how "slightly smaller" the other apartment in the building was? was it on the same floor or close to the floor where you are looking?
does the apartment that you want need extensive renovation? how far apart are you in asking/offering prices?

once all of those questions are answered, you can then make a decision.

entered contract for $970K. how do you know that? Is that the number or the last ask? Some sellers have a price they will go down to and that's it, reguardless of comps.
Unless your in love...these boots are made for walking...

According to the floor plans, the apartment we are looking at is 100 s/f larger, but having been to both apartments, neither is the size described in the floor plan. The apartment we are looking at is on a higher floor with no view, but the apartment on the lower floor has a tree top view. The apartment needs some cosmetic renovations, but is liveable. We are more than $200k apart. Wouldn't a sale in the same building with the same basic layout be the best indicator of market value?

The seller should be willing to deal in good faith based on the comp. If not, leave your number and let it simmer. Appraisals are an issue today and a solid recent comp will play a huge role in your deal. The seller needs to be aware of this.