We just fixed up the house and have it on zillow with several applications in 24 hours. 

Perhaps we "buy" the house from them for the $328K balance to satisfy the lender and don't need a large down payment and then have a separate contract with them to pay $x per month until we've paid the full $172K amount.

In your example, they bid the property to $225k because it's worth $300k so they're going to get all their money back when they sell it.

At this point since it's after the fact while not totally correct; you may explore adding the missed asset/basis amount as a selling cost to just reduce your gain. 

Duplexes in the area sell for up too 250k+/unitHope this helps. 

How can you sell it. does the original owner needs to sign any docs to do that?

If you want to sell this property, you need to let someone inspect it at least once and the discount for due diligence needs to be worth it. 

where is see a total cluster with Morby students is they are now selling their car's sub too.. can just see it.. sell a car to someone on facebook with the promise they will pay our payments ..

Only other wild card is if they destroy the house on the way out.

I don't like the conflict of interest this comes with, but I can see the benefit as a buyer of getting access to properties that the brokerage is selling.