The Wolverhampton-born centre-back, who has made one senior appearance for Wolves after coming through the academy, enjoyed a second spell on loan at Birmingham this season, where he played 34 games in all competitions and scored two goals.
He has two years remaining on his Wolves contract, but is now being chased by second tier clubs, who are looking to sign the centre-back permanently.
Birmingham are keen to bring the 23-year-old back to St Andrew’s, but are yet to make a bid as they consider their financial concerns ahead of the summer transfer window.
Stoke are also believed to be interested and could make a move, but it is understood no bid has yet been made, while Sunderland are also reportedly monitoring Sanderson’s situation.
The defender, who is the nephew of Wolverhampton athletics legend Tessa Sanderson, has a number of suitors this summer and with his opportunities limited at Wolves, it is understood the club would be willing to let him leave in a permanent move.
Sanderson suffered a back injury in February and was ruled out for the rest of the season, but was deemed fit enough to start the final game of the season, where he scored in a 2-1 defeat to Sheffield United.
Birmingham have never hidden their desire to sign Sanderson and are readying a bid for him – after boss John Eustace heaped praise on the defender.
“Dion has been a fantastic player for us this season. He is a player we want to keep,” he said in February.
“Absolutely I want the club to look at signing him. I think he has proved his worth, the fans love him to bits, like we all do here at the football club.
“He is somebody I would love to keep moving forward. He has really bought into Birmingham City. He gets the club, he plays with his heart on his sleeve. He is a cracking lad and anything I have asked of him he has done and he has excelled.”
Meanwhile, Burton Albion remain interested in taking Wolves right-back Dexter Lembikisa on loan.
The League One side have been monitoring the 19-year-old for some time, as previously reported by the Express & Star, and are still keen on signing him as Port Vale have now also been linked.