I've bought a few upside down props subject to the over encumbering debt and then negotiated down the liens.....as the new owner.  

I think for me it will mostly be a negotiation leverage tool.

I only like a handful of them maybe 15% to present to my clients.Just like SFR or any other class it is about buying the asset right going in and the location.If a tenant might be having trouble we tend to do a negotiating settlement for release of liability for the rest of the lease obligation.One of my clients we did this.

The bank wants its money,all of it.If it was a bank foreclosure sale it would be handled by the court and usually done at a courthouse or other designated area.The bank will always bid first for the full amount of what is owed and you have to beat it or let them take it back and negotiate directly with the bank for a lower price.If that's not exactly what's happening here I wouldn't touch it with a ten foot pole.Go back to the bank and get more information and verify the bank is or is not foreclosing on the property at this time.

Some buyer's agents also ask for a smaller fee from the buyer (depending on the deal), but this is negotiable and you should be able to avoid it. 

. , that she is willing to negotiate on the price, She also said last year, that there are a couple ways her Realtor could finance house for me.Can you please tell me your creative real estate ideas, to possibly make money off this house.

We could push the PM for documentation and justification for the fee as part of the negotiation.  

@Matt Schelberg as Charles says yes you can negotiate with the city on back taxes on these properties.

What and how could I negotiate with the seller to make it attractive for both parties?

I will have to do some negotiating somewhere because the seller is asking a price that is $15-20k above the comps in the neighborhood.