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The brother-in-law could stay rent free without challenge. That saved him a lot of money and you subsidized his cost of living. Now he wants the same deal on the house price. Sounds like you and your wife need to take your 50% of the responsibility of setting the tone of how the inheritance will be divided. There are always two sides to every story. Say the house is worth another $40k. That's $20k to your wife less the cost to sell the property (commission, holding costs, etc.). The number you are trying to recoup may be pennies on the dollar for the mental anguish cost your wife must endure to settle her parent's estate. Remember, your wife must heal from losing a parent and prevent losing a sibling over money. Stuff is just stuff. Key your attention to supporting your wife through a very tough time.
Another note, as UC stated, I have a problem with an appraiser commenting on another appraiser’s report and expressing their own opinion of value without doing the analysis first. This is not about putting holes in the other appraiser's report...it’s about what is the property worth.
An honest appraiser would also fair....if you can find one. It disturbs me when people talk about "my appraiser, "our appraiser", "his appraiser" etc. I do many divorce and estate appraisers and most of the time the lawyers will agree to use one appraiser (me) because they know I will not be biased or influenced by anyone or circumstance. I don't want any client to think I am working toward a number that will benefit them. It takes many years to build a reputation of being an honest appraiser.