I am a commercial real estate agent and although I do not sell residential except very occasionally for friends, as a buyer’s agent. The other posters are correct, you can offer and sell your house for whatever you wish assuming there is a buyer for the price point you are willing to agree to.
Aside from any requirements of a homeowner’s or condo association’s bylaws (if you are subject to them), there is no state or federal penalty or other punishment for doing so unless it is part of a scheme to defraud someone (including the government) in some manner.
Property tax assessments are obviously impacted by price, but assessors are not complete idiots and have as good (if not better) an idea of fair market value (FMV) as most appraisers and real estate professionals. If you sell a 250,000 house for 100,000. it is unlikely that your assessment will be immediately reduced to (or even close to) a 100,000 basis as it is obvious that the average price of comparable "like kind" sales is more than 200,000. If more below market sales occur and the average prices start to change then assessments will change.
Your sister is wrong unless the intent of the below market sale is to defraud the government or others. If property in an estate, for example, is willed to, or otherwise disposed of to a relative (ie non-arm’s length transaction) for well below market value to decrease the tax impact the estate (or the recipient) would be subject, to the government can audit the transaction and potentially assess penalties.
If you are going to do this (lower the sale basis with below market transaction) the key to making this work is not being stupid. The government is not going to care (as much) , in most cases, if the sales differential, even if below market, does not net them any meaningful amount of taxes. For example, you could sell a 30,000 to 40,000. FMV rental unit for 20,000 to 25,000 and no one will likely blink an eye. In selling properties for hundreds of thousands or millions you can get away with being aggressive towards the lower end of valuation if you have a complaint (notice I didn’t say competent) appraiser and a reasonable argument to make, but again, the IRS is not a pack of idiots and if motivated they can easily find fair market value for properties.