A short sale is not always going to be the best solution, but many times is. Some of the benefits to a short sale over foreclosure include:
The homeowner avoids foreclosure and the massive credit damage that goes with it.
The homeowner has more control over the timing of the transaction and their move from the property.
The homeowner is able to avoid the embarrassment or stigma attached to foreclosure. A short sale can be handled very discretely. To anyone not involved, the transaction looks no different than a traditional sale.
In many cases, the homeowner gets a full release from the lender and is not financially responsible to repay the loss the lender takes.
The transaction can be completed at no cost to the homeowner. The sales costs, commissions, title and escrow fees and most repair costs are all paid by the lender.
An amicable solution to a difficult problem. The homeowner wins by getting the home sold, getting the loan paid off and having the ability to move forward without a foreclosure on their credit. The lender wins by saving the added expense of the foreclosure process.