Hi, Welcome to JustAnswer, I will be glad to assist you and the only thing I ask is that you leave a Positive rating so that JustAnswer will give me credit for assisting you. There is no additional charge in leaving a positive rating, but it is the only way that JustAnswer will give me credit for assisting you, Fair enough ?
If the contract lists the selling price as $200,000, then when your brother who is the Administrator of the estate files his estate accounting with the Court, he will have to list the house as being sold for $200,000 and he will have to account for these proceeds. Of course, $167,000 will be paid to satisfy the reverse mortgage, but then that leaves $33,000 for which your brother will not be able to account.
In addition, your brother, as the Administrator of the estate will sign the deed transferring title to your niece and the deed will recite that the consideration paid was $200,000 which is false, Lastly, the estate would be paying a transfer tax which would be higher because it would be based on $200,000, rather than the actual amount for which it would be sold. All in all, it is not a good idea to report the selling price as $200,000 because the transaction involves a lot more people and the estate and the only one who would be subject to perjury charges and a penalty would be your brother. Your niece might want the selling price overstated so that she will be eligible for a $175,000 loan, but your brother will be responsible for everything related to the estate and he will find himself in more trouble than he will be able to explain away.
Please be kind enough to leave a Positive Rating so that JustAnswer will give me credit for assisting you. This will not cost you anything additional, but it is the only way that JustAnswer will give me credit for assisting you. Bonus is always appreciated,