As you continue with your effort to purchase the property, you need to calculate your potential profit with the transaction. Consider the costs associated with the acquisition of the property and what you intend to do with the property. Whether you plan to buy and hold the property or flip it should determine how you want to structure your purchase offer.

Although your purchase offer is with the owner of the property, the amount you pay is what the lender is being asked to accept as the payoff of the loan.

Your next step is to verify the value of the property. Do your own market analysis of the area and the property. Use recent comps to determine the realistic value of the property.

As part of your calculations, add up all the costs of selling the property.

Use this number as part of your negotiations with the lender.

Work the calculations. Subtract the total amount owed against the property from the estimated proceeds of the sale. On a short sale, this will (or should) be a negative number. Look for other loans and liens against the property.

Don't accept the total amount owed from the defaulting borrower. Only use verified numbers, which are provided directly by the lender. Borrowers are often confused and disengaged by the time their property has reached foreclosure status.