I’m not convinced there’s a deal here, and I’m even less convinced that you should take this on as a first project.
To answer your question, sure, someone can buy this house subject to, but the buyer will need to reinstate the loan (that is, bring all payments current and pay all fees in order to stop the auction). If the loans total over $300K, which I’ll bet they do, the reinstatement amount could be huge (and this also sucks out what little equity there might be in the property).
Also muddying up the water is that you have one, perhaps two, Realtors involved, both of whom presumably want a commission.
All deals are driven by one thing: the numbers.
What’s the house worth?
Does it need any work? How much?
How much is owed?
How many loans are there? Amounts?
How past due are they? Amounts?
My guess is that this house was bought with a first mortgage for 80% of the purchase price and a second mortgage for 20%. The first mortgage is probably an ARM, and the rate has gone up enough over the last few years to make it very difficult for the owner to make the payments.
If you had the time and desire, you could try to do a short sale here, but I don’t know how soon the auction is scheduled to take place.
I just don’t know that there’s a wholesale opportunity here. Put yourself in the investor’s shoes. What is there here for an investor to get excited about? How do they make money with this deal? Right now it sounds like you’re basically asking someone to pay retail for the property plus a fee for yourself.
Where’s the upside for your wholesale buyer?
I can tell that you’re eager to do a deal, but I’ll be surprised if this is the one for you. It would be nice, however, if your first lead turned into a deal.
Good luck, and let us know what happens.