Hi folks, I’m a total newbie so please be gentle. We’re trying to buy the house next door. Owners haven’t paid mortgage in 4 years. We’re under contract with them for an all cash deal but they keep missing closing dates. The mortgage servicer is putting it up for auction so we plan to buy it there. The complication is the liens. There are about $300K in various liens that the auction attorney confirmed are junior to the $296K mortgage. There are also three IRS liens that total $3 million. The last time the house was at auction it sold for $398K (owner filed bankruptcy and negated the sale, then ignored the court until they dismissed his case). Attorney confirmed that IRS was notified 25 days before auction date. 

How risky is this? We’re not planning to flip or sell and we’re aware there is a waiting period. We did an inspection so we already know the house has to be gutted. The owners also still live there. Can we do anything in that waiting period? Can we get an owners title policy for anything that comes out of the woodwork?

any and all advice appreciated!