Is their idea about what should happen to the house based on them thinking that no one wants the house? My grandmother felt that way about her house. She used to say, "Who would want this?" Granted, a 20% down payment would not have been $180,000 on her house.

If their idea about selling the house and splitting the money between their children is about trying to be fair, then I think they would be willing to sell to you for fair market value and split that between their kids.

I would also like to point out that while it is financially responsible to put down 20%, it is not always necessary. I would avoid the putting no money down route if you can, but you can look into other loan options that require smaller down payments.