Be sure to interview several agents who have short sale experience.
If you owe less than the property is worth, I would consider just selling before the value decreases further. Contact a Realtor in your area.
Good luck to you!
The first deals with the amount of value to be added by the cosmetic updates. Let's say--using your approximate numbers--that with no cosmetic updates at all you'd be able to sell it for $105,000. With the cosmetic updates, you'd be able to sell it for $120,000. The question, then, is how much those cosmetic updates cost and whether they'd be cost-effective. If you could spend $5,000 and increase your sales price by $15,000, seems to me it'd make a lot of sense. Yes, you're still losing money. But you're losing $10,000 less.
As a side note: Generally cosmetic updates (paint, carpet, a bit of landscaping) tend to be among the highest-return areas. Not always, but very often.
The second consideration deals with how quickly the house sells. Let's say the cosmetic updates only return 100% of investment. You spend $5,000, but that only raises your sales price by $5,000. Is that a wash--a neutral outcome? Dollarwise, yes. But the house very likely will sell quicker. The walls that need painting, the carpets that need to be replaced, the dead bushes in the front lawn . . . all those will turn off some buyers. It's likely to take longer to sell. So--just making these numbers up--let's say you do the fix-ups and get a contract in 60 days. You don't do the fixups and you get a contract in 180 days. Your net is the same, but you've sold your property 120 days faster having done the fix-ups.
Your Realtor should be able to give you a fairly solid idea of what fix-ups should be done, and what your return on investment will be. And he/she also should be able to give you some idea of days on market, either with or without the repairs.
Hope that helps.
The buyer will subtract from their offer more than the retail value for these same cosmetics. Then you take a bigger hit.
ESPECIALLY items that will appear in the inspection report such as wood damage or wood rot, peeling paint, open soffits and damaged facia. Interior paint returns more than carpet UNLESS the carpet is retaining odor or is really dirty or worn.
Consult your local real estate professional to strategically position your home in regards to competing homes.
The "as is" route will get you .40 to .60 cents on the dollar. Can you afford to take another hit? In this price range more than likely your buyer will be going FHA. Some of the repairs you mentioned my be required in order for the buyer to obtain that loan. It is always cheaper to do the repairs on the front end, than to open a can of worms on the back.