1st Foreclosure - Alternative Options On Paying Cash?

This is my very first post so please excuse any protocol mistakes. Im working on a shortsale. Seller want to just get out. 96.5k on the 1st mort. and 24k on the second. with 2k in arrears. Did comps on dataquick and low avg high sales @124k, 144k, 158k I saw the property and I got a Document Release form signed and sent to lender, now getting a short sale packet back. I am meeting with the seller to get bank statements and bills. and i have written a letter on sellers behalf ,saying they can't pay any more and want out. After i fill out the form and send info back to the lender, what should I be starting at as a bid to buy the house.? How do i use that info as leverage to bid down the second? Is cash sale the only way to complete a short sell? Does anyone know any good hardline lenders? How does the deal sound? Do dataquick comps cut it, or should i be looking at MLS comps? :-S