Potential Short Sale Deal?

I’ve been an agent for about 5 years now, but just started getting into my own investing.

I have a potential deal that I was hoping to get some feedback on…

There’s a property that’s on the market for $425K. It has been reduced down from it/s orgininal price of $459K. Market is starting to soften up a bit here in CA.
The agent has pulled it from the MLS and now has it just as an exclusive listing. I spoke with her today as I was comping out a house next door to it and she mentioned that the owners, recently divorced, are just looking to get out of the deal. They would take what they owe on the property which is $404K.

I pulled the tax record and it’s showing that there are 3 notes on the property.
1st Mortgage = $255,200
2nd Mortgage = 63,800
Private Party Lender = $85,000

I’m not sure if they’re behind on their payments yet, but I know that they can’t afford the house anymore. I will try to find this out tomorrow when I speak to the agent again.

Here’s what I’m thinking…to tie up the property, get the owners to authorize me to speak with the lenders directly, and try to negotiate a short sale on the 2nd and the private party note? Or would it be better to try to negotiate a subject-to deal? Any feedback would be much appreciated.

The house is in great shape and probably only needs about $5 to $7K in cosmetic repairs.

FMV = $400K

Any experts out there who could shed some light on how they’d approach this deal??

Thanks so much