You need someone to guide you. OK, so you want to buy the neighbors house - right? He needs a loan modification or he will lose it to foreclosure because he can't make payments. Let's assume the house is worth less than what he could sell it for or I guess he would be selling it. For you to buy it the seller must pay off the loan in full. Are you willing to buy it for that amount? If so buy it from the guy for enough for the seller to pay off the loan and it's yours. But I bet you don't want to do that because the house is not worth what is owed on it so he can't sell it to you.
The neighbor must get the bank to allow a short sale (what you are calling a pre-foreclosure) or you wait for the bank to foreclose and auction it off in which case the bank will probably buy it for what is owed and then sell it at a loss.... more