A house was offered for sale at half of fair market value. The man selling had poa of elderly mother-in-law. Is this legal?

It sounds like some of it depends upon the power of attorney the son-in-law has. If his power of attorney becomes effective only upon his mother-in-law becoming incompetent, there will probably have to be competency testing. Even if she is proven incompetent, the low selling price is a trigger to scrutinize what this person's motives are for selling at that price. He may be wanting quick cash for himself. Remember, you are only a good faith purchaser (i.e. generally protected from losing the house to the mother-in-law) if you have no notice that there might be something wrong.