Also, have you considered seller-financing (rent-to-own)?

I always love when I show up to a listing presentation and have the sellers show me a "Zestimate" and ask why my number is different. 

Or can I do a bug inspection and use that to counter with the seller as well as the actual inspection?

Keep in mind you can negotiate that the seller pays your closing costs or part of it, depending?

The seller is willing to sell the house.But they need the approval of their lender to sell it for less than they owe the bank.Until the house is under contract, you can express your interest your interest and make your offer and the listing agent should pass it on to the seller.Hope it helps

(Seller says that kitchen is updated, bathrooms are updated, and tile floors throughout.)

Even at $45,000 I think its a bit under market value, but I would hope to be able to get the seller down to $35,000 - $40,000. 

Nobody provided you the HOA rules, not the seller, not the realtor and not the closing company.

Seller has outstanding $78K mortgage and is willing to come down in price instead of making repairs himself.

Think of the buyer as saying “I will buy your home if X comes to pass by THIS DATE.”The “X” can be anything from loan approval to acceptable home inspection results to the home appraising for the agreed-upon sale price.There is always a date attached to a contingency; a time limit under which the contingency must be removed or the buyer is in violation of the contract’s terms.There are seller contingencies too.