if the house is on the market, ask the listing agent to show you the preliminary title insurance on the property. The title, or title insurance is a record of all the liens and money owed for that property. If the agent hasn't ordered title yet, go to your yellow pages and call a title company, give them the address, ask them if there are any liens (sewer, back child support) or taxes owed. they may charge you. the listing agent should give you this info--but i dont know about your state.
if they owe the bank 130,000 they cant sell it to you for 105,000. Not unless you do a short sale with the bank. Banks will take it to auction first on the off chance someone WILL pay 130k or better yet 135-140k when they start bidding.
bottom line is, if you want the house and the fair market value (135k) is reasonable, why wouldn't you buy it at the market price? if what you are looking for is the deal of a life time, it will probably go hand in hand with the hassle of the auction.
some counties have websites that actually show how much the taxes are on a property and what is owed--you may have something available like that.
The foreclosures are becoming really common. In seattle where i am from there are thousands of houses in foreclosure. The median price for a house is around 400k. so even if you get a 500k house for 400k-YOU STILL OWE SOMEONE $400k!!!! and what if prices continue to drop? that 400k house is now worth 300? --well you get the idea.
good luck with your search. my feeling is there are probably no shortage of houses in foreclosure in your area.