House Hunting Sucks-Trying to Buy a House from a Relative sucks worse!

So I've been wanting to move out of this tiny apt for as long as I can remember. It's a 2 bedroom. When I moved in with my SO I had my two children. At first they shared a room. Then as they got older because they are of the opposite sex, re made the dining room our living room and the living room into a bedroom. So my oldest (15) is in what used to be the living room. Well then I got pregnant with my youngest and we had to make what was once a big pantry off the kitchen into a bedroom. But it's too small and none of us have any privacy.

We started looking for a house before the baby was born and it just didn't work out for us. Which ended up being a blessing because then after she came I had to stop working due to her health issues.

Fast forward to now and my Brother In Law's grandmother passed away a few months ago. They dont' want to sell her house this second because of the market. So they were thinking about renting it. My sister asked me if I would want to rent it and mentioned they might do a rent with an option to buy. So I like the house alot, surprisingly SO is on board and the kids really want to move. Better neighborhood, more room, our own yard and best part -AWAY FROM MY INLAWS!!!! lol

But we're doing this as a FSBO to come up with the purchase price etc so we can draw up a contract. It's hard to do it without an agent. I'm a pretty smart girl. I have done a ton of research. They told me the asking price of $229000. The house is not worth that much. They are basing this mostly on the list prices of two houses on the street right now. I know for a fact one of those houses is way nicer inside and newer, has a fireplace and about 700 more sq feet of living space. If it wasn't a relative, I'd be so comfortable offering what I thought was a fair price, way lower than what they're asking. But it's weird because I don't want to insult them. My sister is like my best friend. I wish I wasn't dealing with her to be honest but her hubby is way too busy with his regular job and his store that he just bought to really do the leg work. So I need to make an offer today and I'm stressed to the max about it. SO is not much help. He doesn't care as long as he's not paying more per month than he wants to, it's all up to me.

If I don't get this house,it's not the end of the world, I know in about 6 months we could buy another house if his job situation is good. But this is just a perfect opportunity and I so badly want to be able to give my kids a better living situation.