If you truly want the house and are willing to wait a few more months to close, you may want to suggest to your Realtor to tell the listing agent to recommend to the Seller to move into the house to make it his "primary residence" and then do a HAFA short sale. On a HAFA short sale the seller is forgiven any loss and because it is the primary residence it will get an exemption when the form 1099 reports the amount forgiven. Additionally if the Seller qualifies for a HAFA short sale he will get $3k at closing as an incentive. Seller must be current with HOA and must be living in the house (there are certain exception to occupancy, though).
Hope this helps.