lmh,
I agree with SoCal - try informal rush, sometimes formal turns people off who otherwise would love being in a house.
Is it living in a sorority house itself that you don't like the idea of? I'm not sure how it works at IU, but ask the ladies if there are any options for being an unhoused member if you don't like the idea of living in that environment.
Whatever you decide, I'm glad you decided to talk it all out with your family and be straight up with them. A girl went thru rush at one of our chapters who was a double legacy (mom & grandma). She didn't get a bid, and grandma (who apparently donated quite a bit of $$) is on the phone to nationals reaming them out and demanding the chapter be disciplined for not giving the girl consideration (we don't guarantee bids, but they are to be asked back to the 1st round). Turns out the girl never put down on her rush form or told anyone she was a legacy. I would bet anything that the poor girl wanted nothing to do with Greek life but didn't have the heart to tell her family.
Just keep everything open and your family will get over it in time (just like my dad has gotten over me not marrying at 22 and popping out oodles of grandkids
). Good luck, and let us know how things go.