OK AUTUMN! I keep answering this one lately.
You have a home lined up? Than you need to get a Title Report showing all the liens and encumbrances. I would get a signed contract with this seller. If you try to buy direct you have to have a Title Insurance Policy to guarantee you what you are getting and to make sure the Liens are paid off. This home may have more debt on it than it is worth and therefore you and the seller and their attorney or agent should attempt to negotiate their balance through a SHORT SALE where the bank will take less.
This way you get the home for sure and the Seller avoids foreclosure. If it goes to Foreclosure you will be competing with many other investors at the Courthouse Steps. So there are some things to work through here. If you like this home try and work things out with the Sellers. They are likely not getting anything out of this anyway. Their bank will not negotiate with you or them dircetly unless there is an signed purchase agreement. That is the way thiings work. The Bank will not want to take this back either so you have to work at this but it can be done.
I hope that helps!
Dirk T Knudsen
"The Real Estate Doctor"