According to reports in Nottingham this morning, Forest are now favourites to land the winger, and are believed to have prepared a six-figure offer with a hope of completing the deal very soon.
Forest's Championship rivals Huddersfield Town were understood to be leading the race to sign 'Pato', and are believed to have had a bid rejected.
Reports also suggest Paterson has become a Forest target thanks to the Saddlers former 9-day assistant manager David Kelly who recommended him to Forest boss Billy Davies.
Coventry born Paterson made a big impact in League One last season and scored 13 goals in 51 appearances, in all competitions, leading to interest from Huddersfield Town.