Knowing that a) we do have the ability to withdraw contributions tax-free, and b) we have been keeping some "powder dry" lately due to general market conditions, what are the group's thoughts on withdrawing some/all of our contributions for REI use?

It is about the ability to make a profit that counts.

Now he may have the ability to bring it into compliance by getting a retroactive permit and a variance for the setback, but that will also resolve your issue.

IE do you have upper class properties that are in high demand to a wide range of investors.. or is it a narrow niche that is very hands on high touch that maybe there is a smaller market or ability to exit at a good price if one needed to. 

If the home was a 200k home and is already updated, they’d either list it or sell FSBO for what they want to get for it and they have the ability to turn down 190k offers.

Most of these sights (1) are run by tech guys with no real estate or investment experience (2) the real estate or financial analysts, underwriters or managers they hire are relatively low paid, limited experienced professionals without the ability, skill or knowledge to competently evaluate a commercial deal (3) if the site itself is an “intermediary” then most of the sponsors are also new, inexperienced, and only their least attractive investment offerings end up on theses sites.I’ve been syndicating real estate investments and real estate note investments as a sponsor since 2001.

As you mentioned, you can say great we are not going to put an offer in to call their bluff and if they do have the open house, you still have ability to put that offer back on the table.

However, I've begun using a CPA to help with my tax filings staring for the 2021 tax season and I pay him to navigate the rules and regulations of what is required.I have heard of CA pursuing "unpaid" taxes on out of state residents who have rentals or earn income in CA, so for my situation, it is worth hiring a tax professional to ensure I am doing everything correctly and am not hit with a bill 5 years from now from unpaid taxes + interest claimed by CA.

it seems pretty low risk with selling my primary house with the ability to borrow against another one of my properties if necessary, but I am relatively new to any lending outside of a bank.  

The most important qualities are sales ability, being uncomfortable (when marketing), being analytical, and being ethical.Its a sales job at the end of the day, so its great when its great.