First, determine the market price of preforeclosure property. Ask your real estate agent to prepare comps (comparative market analysis) listing offered and sale prices of homes in the last six months and homes listed for sale or perding sale. Always check Zillow data concerning the property.
Thoroughly inspect the short sale house for possible repairs needed.
Make sure that there is no missing appliance (refrigerator, oven, washer-dyer, etc.) or item. Some angry preforeclosure homeowner remove refrigerator, washer-dryer and other appliances.

Precautions relating to preforeclosure short sales

Make sure that you are dealing with legitimate owner. Simply show your driver's license first and expect homeowner to the same. Don't deal with persons acting on behalf of real property owner.
List advantages for preforeclosure homeowner and yourself honestly. Emphasize win-win solution for both parties. Don't hide any fact. Honesty pays off!
Keep in mind that if the preforeclosure short sale is subject to lender/bank approval, you may not get a chance to further lower the price after home inspection. Most banks don't negotiate once they approve the short sale. Only exception is repairs relating to home safety and security.
Be sensitive to homeowner's feelings. Shift the subject to other areas if you notice any sign of distress.

If the preforeclosure short sale home is covered by Home Affordable Foreclosure Alternative (HAFA) Program see how you can take advantage of already approved HAFA preforeclosure sales that you can close faster than standard short sale.

You can buy real estate properties at below-market prices under HAFA pre-foreclosure short sales as the program is supported and approved by the government, bank/lender makes big financial sacrifice, and government provides incentives to all parties under Fannie Mae-administered program.