You are talking about negotiating a Short Sale transaction with a lender/s.
It's a complex process and will be prudent for you to enlist the services of a
Letting the property Foreclose will not be prudent, as an Investor can but the property on Court steps
And outbid you or buy it collectively as a lump of homes.
Hence, go enlist the services of a Realtor.
I am concerned that you are not knowledgeable about what you want to do.
How have you determined the value of the property? How have you decided upon a price? What paperwork will you prepare? Who will prepare the paperwork? Do you know how much the seller owes including penalties and fees? Do you realize that the existing lender will not release the deed to you without payment in full or approval on a short sale? How are you going to pay for the purchase? Do you know how many liens are on the property and what are their amounts? Do you know if the property taxes are current? Who will pay what closing costs?
Let me know the address and I can check if there's any notice of default or trustee sale issued so that you can move forward accordingly.
Has the seller received a Notice of Default or Notice of Trustee Sale?
Is the sales price you agreed upon enough to pay off the seller's lender? If not, then the loan won't be satisfied. So who will pay for the difference? You?
If your seller is truly underwater, has he considered trying to sell the property as a short sale? If not, he should at least look into the possibility.