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Once my Mom passed, Dad was ready to book from that house, he no longer had the energy to keep up the maintenance, and he was afraid of all the stairs being he was a fall risk.
I had to list their house "as is" as my parents didn't do much updating which is understandable as they were of the "if it ain't broke, why fix it" way of thinking [I do the same].... my Agent got several contracts on the house at a reasonable price as house flipping seems to be the thing now a days. The house was in MLS listed saying "as-is", "rehab potential" "needs work", etc. so the Agents could search for those terms. We also got some ridiculously low offers.
As for appraised value, was the house appraised by a licensed appraiser? Or is the appraised value what is on the tax records? Example, houses in my area sell far above the county tax appraised value.
Can you...
Sell by auction and bid for it?
Try another realtor? (that worked for us)
Meanwhile keep meticulous records of your outlay so that you can reclaim it in full in due course. And surely Medicaid will be able to advise on how far you can go to expedite the sale without being deemed to have deliberately undersold?