4 siblings inherited a house from father and got an independent appraisal for value RANGE of $185,000-$210,000 and a suggested listing price of $204,000 on day of death. Question 1: Which of these figures is the FAIR MARKET VALUE of the home that should be the stepped-up cost basis for the inheritance?
2 Siblings want to buy out the other 2 siblings and renovate and resell the house. 2 siblings being bought out have no interest in renovating and want to liquidate cash now. 2 siblings keeping the house DO have cash to pay for the buy outs.
Question 2: Problem is this: the siblings who want to keep the home are offering to buy out the other 2 based on the figure of $197500 (Middle of the $185,000-$210000 appraisal range) MINUS 6% which they justify as the realtor cost that we'd incur if we sold the home through a realtor instead of selling it to them--so, essentially they are putting a value of $185650 divided by 4 as the price they will offer to buy out each of the 2 siblings:$46412.50. Does this make sense?
Question 3: If the above 'deal' makes sense, then what is the capital gain or loss that the 2 siblings who are bought out must declare? Do the 2 siblings who keep the house share in any of that loss or gain? And if the 2 siblings who keep the house then turn around and sell it for more or less (gain or loss), what is THEIR COST BASIS? (If they do not live in house or keep it much length of time)??

Remember appraisal value of the house is just that, a idea of what the house is worth, What the real value of the house is, is the price of what a real offer can be. Is the market good or bad, I have a house that has an appraisal value of about 120,000 and I have not gotten a good offer over 100,000 for it. No one is buying houses in this area right now.

So the value of the home is just that the value that the person is willing to pay and what the other people are willing to offer.

And they are right, if they are not using a realitor they will be saving that fee and it is something to be considered.

And the capital gain will be the same if they sell it to family or if they sell it to a stanger, if they want to sell it, this does not sound like a bad offer,
most likely they could ask for another 5000 each.

You may be mixing up the "cost basis" with the inherited value. The "cost basis" does not pass through to heirs.

Have an appraiser appraise the value for financing purposes which should not be the same as the inherited value.