House on MLS owes WAY more than its worth... strategies?

[Carson Wilcox]

Went and looked at a great house... total turd in a nice neighborhood...  grandpa lived there.. still stuff and vehicles on property... needs work, but its a BIG house, with a granny flat added on upstairs...  They want $375k, which is laughable, as a recent comp with the sq. footage fixed up and with a pool is like 425k..

I offered $200k, quick close as is, but with inspection contingency... agent responds that they owe more than that, no point in countering.  my agent asked what their balance was... $300K... so only like $330k will pay commissions and costs and pay off the bank...  

Short of watching for it to go into foreclosure in a year...  Is there anything I can do to get this house...?    Will banks look at an offer to close out a mortgage below its balance... any other sneaky ways to go...?  Love to hear some ideas...