As a rental it sounds like you need to lower the rent. It is what it is. I doubt the other house is trying to undercut you, rather they are also not landing a fish even at a lower price.
I am having a harder time renting my extra house than usual this time. Lots of traffic but only tenants I would screen out want it(I am pretty strict). So, I am thinking about dropping the rent to entice quality renters and asking for first last and deposit as a sort of litmus test for that. In the long run it might work out better.
As to short selling, that is a different issue. It’s up to you if you have had enough of your alligator.
