Help with a preforeclosure opportunity

[Dan Kaen]

Investor community - I've been deal hunting for several months now so far have come up empty, several offers in on properties found on the MLS with no luck. I have an opportunity to buy a house from an acquaintance. Here's the background - the couple is divorced and both parties have moved out of the house, it currently sits vacant. Foreclosure proceedings are underway, and before I approached them they were simply waiting for the bank to foreclose on the house. They would very much like for me to buy the property before the foreclosure is finalized. Based on the ARV, there is currently about $160k equity in the house.

My biggest question is...

How do I proceed? The principal amount owed before late fees and interest is approximately $200k, when making my offer do I need to account for the late fees/interest? Or is it common for the bank to approve a sale for the principal amount owed.  They are currently not making any payments, and the foreclosure action was filed in July 2017.  I checked with town hall and all taxes are up to date, and a lien search yielded no other liens or judgments against the property.

This sort of just fell into my lap, and would be my first fix and flip.  I want to make sure I proceed correctly in order to make it happen!  Thanks in advance...