Thanks for your question.
I know you won't want to hear this but the homebuyer credits cannot be claimed if you buy a house from a related person. For purposes of this credit, related persons include your spouse, parents, grandparents, children, or grandchildren. That is how congress made the law. I think they thought it would prevent people from buying a house from a relative for a fraction of the fair market value and then be able to claim this credit. Unfortunately, there is no provision for paying your relative a "fair" price for the home.
For reference, see Instruction 5405 (Rev. December 2009)
Sorry to be the bearer of bad news.
An exception for this type of issue that is clearly set in the tax law is just not given by the IRS. When you check "Yes" to Question E on Form 5405 , it simply states you cannot claim the credit.
You are welcome to call IRS at 1-800-829-1040 to verify the above information. You can also contact your U.S. senators or representatives to complain about the law if you would like to.
Hope this helps,