Sheriff sales or "courthouse steps" sales are cancelled if the owners bring the owed amount current. The best approach is to contact the sellers, which you have done.

You should be able to access the public records for your county, probably online, so that you can find out about liens and the current titled owner of the home.

All liens must be satisfied for a seller to transfer property.

The last few years have not been normal foreclosure markets. Owners have managed to stay in houses for years without making payments. Taking advantage of the many Bills that were introduced to stop the real estate market from totally crashing. Banks have also taken their time to foreclose as they did not want to take the losses ... a deadbeat property still looks like an asset on the books!

Sheriff sales can be canceled for many different reasons other than being paid up. If it came up for sale again that is a good sign that they didn't pay up, instead it was canceled for some other reason.
First go to the courthouse, here it would be the District court clerks office. Ask to see the file on xbank vs john doe (fill in the names in this case). Inside that file it should tell you what is happening. After you check this then you can look for other liens.

If it is not settled then keep your eye on the sheriffs sales. Have your cash, check, cashiers check (depending on their rules), and buy it there instead of waiting for the bank to take ownership. This only works if they are not underwater. A good sign to see if its underwater is to see how old the loan is. 15 years old and it might be a deal. 5 years and its underwater. If they owe more than its worth then the banks bid at sheriff sale will normally be what is owed.

Its a lot to explain, but I will answer other questions if you have them.

Thanks for all the responses. I have done a lot of digging on this particular property and the further I did the more confused I get. :) The house was originally purchased in 2001. The loan was sold several different times and there was also several refis. One was a home equity loan and then a refi to a 15 year loan. I don't think the house would be underwater as the 15 year loan would be at term in 2018 and the neighborhood has definitely increased in value.

Is it better to try to buy it as sheriff sale or wait for the bank to buy it and then list it? I am nervous about buying a house at sheriff sale that I haven't had inspected. Can you use a mortgage if you buy a house at sheriff sale or do you have have to pay cash? Because we definitely don't have the cash to purchase a home outright.

I am so impatient! I just hate waiting and feel really strongly that this house is perfect for us - primarily due to the location.

A Sheriff's Sale and a Foreclosure/Trustee's sale are 2 different things in my area.
A Sheriff's Sale is when the property is being sold for non-payment of back taxes and prior owners have a period of several years to reclaim the property and pay the amount plus interest.
A Foreclosure/Trustee's Sale is when the note is called due and the Lenders Trustee is soliciting offers on the Courthouse steps..I believe that full payment is due within 72 hours if you purchase in our county.

Very few people purchase a home at a Trustee's sale around here...most of the Sheriff's Sales are bare land and that is a bit safer purchase.

Many times if you wait for the Lender to go through the foreclosure process the home will be priced less than what it could be purchased for on the Courthouse steps and it will also have clear title. You will also have a much longer time frame to close and enable will you to do the inspections, financing, and a proper/up to date title search. Most lenders want a pre-approval letter submitted with an offer on a foreclosure so get one of those ready.

Get used to waiting if you are going to purchase a foreclosure...some lenders are easy to work with and others will not give an answer until they are good and ready and there is nothing you can do about it.

My advice is to find a Realtor in the area of where the home is at (make sure he/she has completed several foreclosures) and tell them about the home and let you know as soon as it hits the market.
If it is a Fannie/Freddie foreclosure then there is a 15 day "First Look Program" where only offers from Buyers that plan on using the home as a primary residence will be considered...in other words if it is a second home or investment property your offer will not be considered until after 15 days...I believe that Fannie went to 20 days this year but Freddie is still 15.

Again, get an experienced Realtor and this will be much easier. Many listing agents of foreclosures hate dealing with newbies because they don't know the process and especially the process of waiting.

Well, I can tell you that in my area, homes are in pre-foreclosure for years, and even after they are foreclosed on, the bank may not put them on the market for a very long time.

You know what's going to happen? We will buy another house and then in 2 years this house will finally go on the market and we'll have to move again! Lol

Best chance is to buy it at the sheriff sale. Before and after never work out! The sales are cancelled at the many times. It happens when the defendant applies for a mediation process and court gives him relief. This way they drag on for years sometimes. Filing bankruptcy at last moment also cancels the sale. Even when they come for sale the real chances of actually buying a property successfully are 15:1( I do this all the time). You are better off buying from the market unless your options are open and you are flexible on area etc.

Kabir - Thanks for your insight. We actually love our current house but it is too small (as in we has too many kids! Lol Actually we ended up with twins 4 years ago which put us at 3 kids instead of 2 and makes our current 3 bd 1800 sf house a little too cozy.) We had been planning a large remodel and addition (master bed and bath) but decided to look for a year and see if we might find something to buy instead. We really love our current house and the lot is beautiful but it is probably less expensive to move. Ack. Too much to think about. I wish this foreclosure was just for sale. I'd be happy to pay market price for it. I'm not even looking for a deal I just love this particular house and location.

In my state, you can look up all the deeds, etc. for any property online.
Is the house empty?