I found a perfect property - for personal residence that I would really like to own. Need some good advice.

List price is $575K and three recent sales of the exact same townhouse are in the $515 to $532K range, selling in the past 6 months.

Seller owes $415K on a 1st and 2nd mortgage. House is empty and there was a death in the house sometime in the past year. House needs some painting, carpet, yard clean up, etc.

Seller owes $28K in back property taxes and is not current for this year. Taxes owed for 2016/2017, etc.

Not sure if the mort. is current or not at this point and the Seller lives out of the country. The property is not in condition to show, dated, built in 1990. Possibly behind on HOA dues as well.

My only strategy was that possibly I could assume the loan, pay the back taxes, the 2nd and the real estate fees and agree upon a $500K sales price and work a deal with the agents to pay them commission on $500K. (I sourced the deal)

Does anyone have any creative financing deal options that I could offer the seller to get out of this mess without me having to pay $570K for a property that might only appraise for $535K? 

Thank you BP community for the advice.  

@Shannon Tayllor Welcome! If the property is listed I am assuming you have to use the selling agent. I would find a local buyers agent and submit your offer on the numbers you want. The offer usually has the aforementioned payoffs needed. If the recent sale comparable are $515k to $532k I have no clue why its listed at $575k unless prices have shot up that much which is entirely possible. I really would get a buyers agent on this unless I am reading your statement  wrong that the property is listed. Good luck and keep us posted!

Hi Dylan, 
Nice to meet a fellow CA investor!!  

The property has been listed for 70 days and I called my buyers agent to submit a traditional offer. I decided to do some digging and found the back owed taxes. Just wondering if anyone out there has had a seller with unrealistic expectations due to accumulated debt and if they structured a deal that worked for all parties.  

I suppose if it doesn't appraise and I don't want to come to the table with more cash to close, I could have a few options from there.

a. Seller lowers price
b. Owner carry back?
c.  ?

What do you think? 

@Shannon Tayllor I would put your offer in. The offer I would come up with is the fair market price minus, back taxes, HOA fees, plus the home repairs needed. Your agent should be able to ask about the mortgage to see how much that would entail. Then submit. You stated you want this for a primary residence so no need to lowball. Make a fair offer. What did your agent say to offer? If this is in California rarely things sit for 70 days so I would offer just enough to get the seller out of the deal and on their way and you may be getting some instant equity.

@Shannon Tayllor   Likewise, I would just submit an offer.  If the comps are $515k to $535k, start with $515k (or a tad lower) and go from there.  That should still leave the seller with enough to pay of the mortgages, back taxes, etc and gets you in at the lower end of the comps.  Win - win for both.

Other options like assuming the loan or owner carry really wouldn't work.  Most loans aren't assumable and the interest rate would probably be far higher than today's rates anyway.  owner carry won't work because of the existing 1st and 2nd mortgages.  They could call the loan due once they find out about the title change.

Good luck!