The 'trustee' in this cause is only conducting the auction. They had advise that I contact the owner and the lender to see if they are willing to put the house under short sale.

Since you stated that the outstanding balance of the loan is much less than the fair market value of the property, there is no reason for the lender to consider a short sale. Short sales are used when the property is overecumbered, and the lender minimizes their loss by accepting less than is owed. Also from the owner's perspective; the amount that the lender reduces the pay-off is reported on a 1099 as income to the mortgagor.