DEAL or NO DEAL, that is the big question!!

[Ishy Bee]

DEAL OR NO DEAL?

Newbie wholesaler here with potential first deal. Family member (motivated seller) willing to accept earnest money hold on property.

DETAILS...
SFH: 3/4bd, 1.5b
S.F.: 1,724
MLS: 275k
FMV: 252k
OWE: 240k
Condition: Poor and trashed with roofing, electrical, foundational/structural issues due tree growing thru livable space and mold issues brewing.  Property complete rehab, period!!
REHAB: 150k
ARV: 350/400k

Was ready to do an earnest money deposit but the kicker is, she already submitted short sale docs to bank two weeks ago..which is understandable.  Found out about the short sale submission last evening. I really was hoping for a wholesale, as I cannot afford to do a Subject To current 2k mortgage payment.  How to handle??  Deal still or No Deal?