Your family's basis in the property is $161,000 (I assume the appraisal was done around the time of death), and the sale proceeds are $70,000, so there is a loss here of $91,000. Due to the flood, this is a casualty loss if there was no insurance coverage to fully compensate the difference.
The children should claim their share of the loss ($13,000) as casualty losses. Please read on for more help and check out this IRS website as well. https://www.irs.gov/taxtopics/tc515.html
https://ttlc.intuit.com/replies/3301959
