Short sale for myself: UPDATE 2/8/07 Bnkrptcy issue. HELP.

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I have been looking at a house for awhile, the house is likely headed to foreclosure, I am 90% sure an NOD has been received by homeowners.
I want to buy the house for my family, not flip it or anything.

House is listed for 680k, I originally made offer of 610k. 4 months later, I have no answer, no yes, no no, no counter.

I began to wonder why and all I can guess is that broker is negotiating with bank on a short sale and holding my offer in back pocket. Whenever I call, I get a different excuse why no answer on my offer. (I pulled my offer last week)

That pisses me off, can he do that?? He is not presenting best offer to bank, I am sure (not 100% positive) that he has a deal with homeowner that he will kick them back some cash if he can buy house and make commission them immediately flip it to me for a profit also.

I want to negotiate with banks on the short sale myself, I emailed owner and they are in denial and told me to speak to agent, probably not a chance of them signing authorization to release info to me, unless of course said broker advises them to. If that happened I would try and get a signed contract with homeowner.

Here's some info.

566,000 first, payoff is now 604,000 on it. (It is with Columbia)
106,000 second, payoff is around 114,000 now.
House listed at 680,000 which makes NO SENSE as 680,000 doesnt satisfy mortgages with accrued interest and missed payments.
They paid 707,000 for house in October of 2005. House is vacant and in good shape, homeowners moved across the country.
Work I would need and want to do would cost me $50,000.
House would probably appraise for between $625,000 and $725,000 now. Close to $775,000 when cleaned up and work I want to do completed. This is in suffolk county NY.

I know I just rambled, but I will summarize all questions here, some will be dumb, but all help is appreciated.
1) If I am allowed to negotiate short sale with bank, at what price should I try and get homeowner to sign a contract for.
2)I think I am responsible for all liens in a short sale, is that correct?
3)Can broker do what he is doing in this situation?
4) When negotiating short sale, what will be the starting point with the first mortgage bank, the 566,000 original loan, or the 604,000 payoff number.
5)If homeowners are filing for bankruptcy, what impact will that have?
6)Do I obtain deed, and if so, how?
7)Best place to find all current liens?

Thank you. Thank you. Thank you.

Robert

I HAVE ALL ANWERS TO ABOVE QUESTIONS, NEW QUESTIONS IN POST BELOW. THANKS IS ADVANCE FOR YOUR HELP.