Should I buy a property with an IRS lien via seller financing?

[Doug Woodward]

Brand new to Bigger Pockets. Through show 19 so far, but first post.

I just got a property under a standard 1-4 residential TREC contract in Ft. Worth, TX for $45K. It is schedule for a tax sale on June 5th (next Tuesday). It was originally brought to me through a wholesaler who stepped out and put me in direct contact with the seller when they realized how tight the timeline they were dealing with was.  I called the wholesaler's title company this morning to see if they had gotten far enough to be able to issue a commitment that would allow me to close on it by Monday. After originally saying that they were ready, they came back and said that there was a federal tax lien and that would take them at least 30 days to curate.

I called the law firm handling the property tax sale and they said they could not put a hold on the sale even if I sent them the contract for purchase. Further, they said the only way to stop the sale was payment in full (~$10K) by Monday, June 4th.  I have the cash on to make that payment.

My question is -- does it make sense for me to switch this around and make it a seller finance purchase with $10K down used to pay off the taxes. I would then stretch the remaining $35K over 30 years or due upon settlement with the IRS, whichever comes first. I'm spit-balling here. I have never purchased via seller finance before, but the seller is motivated to get her IRS issue cleaned up -- roughly $31K.

I know this is a risky proposition on the $10K, but I think I am willing to gamble on this to give us enough time to work through pay-off arrangements with IRS if it is the best way to keep control of the property until we can get to clean title. We just flipped and sold a property directly across the street for $119K, and we have another property up the same street currently under contract -- so we know and like the neighborhood.

The other way, I have thought of to handle this is to have the seller take a loan (from a 3rd party) to pay the property taxes (if she is willing to take the loan) and keeping our current TREC contract in place buying us the time to work through the IRS issues and go to conventional closing once those issues are resolved.

Lastly, I am not very knowledgeable regarding tax sales, but my understanding is that the property owner has some amount of time to "redeem" the taxes that were purchased for a premium of like 25%, but I don't really want to potentially lose control of the property or add in any unnecessary costs.

Eager to hear any other thoughts or suggestions.

Thank you in advance for your feedback!