Normal homeowner life cycle impacted by trauma of Ian

Dear Gordon:

C o n g r a t u l a t i o n s o n being one of many Cape Coral property owners from Canada, I hope that o w n e r s h i p h a s t r e a t e d you well As you note, a foreign seller has to do a bit more to sell their property here than U S citizens First, you must o b t a i n a n I n d i v i d u a l

Taxpayer Identification

Number, or ITIN, to be able to sell the property

If you have had business in the U S before, you likely already have one

Eric P Feichthaler Real Estate Law

T h e I R S g e n e r a l l y requires that 15% of the g r o s s s a l e s p r i c e b e withheld from any sale towards potential income tax liability It should be noted that this is not a tax, rather a withholding against the tax When you file your U S return next year, you may receive some or all of this amount back, depending on what your profit is on the sale.

One exception to the FIRPTA withholding rule is the sale of a house for under $300,000 When this occurs, no withholding is required when the buyer is moving in as their primary residence, AND is willing to swear to that through an affidavit You have noted a sales price that is higher than this, so your sale would not qualify for no withholding However, if your buyers are buying this as their primary residence, the withholding can be reduced to 10%

Great care should be taken regarding IRS compliance, as failure to do so can lead to serious financial consequences to both you and your buyer. Based on what you have written above, $51,750 would be withheld and remitted to the IRS Based on the likely, profit would be an amount that would result in a significant refund of that

We continue to see a segment of homeowners looking to put their homes on the market because they feel they are reaching an age where they want or need to move to another state somewhere north of Florida to live closer to their children and grandchildren, or near other relatives This is something we have seen happen as a part of the normal life cycle for a lot of people over the years, especially when they do not have other family members living here

However, this time there is a different feel to this natural phenomenon, as most of these sellers are also citing the impact from Hurricane Ian as the other reason they want to move away Many also mention the growth and crowded roads in Cape Coral and Southwest Florida as another reason for making the move, but we would say from our conversations with potential sellers that on Sept 28, 2022, Ian provided the catalyst to their decision making, with the hassles of dealing with home repairs, large unexpected storm expenses and fighting with insurance companies adding fuel to their desire The emotional and financial trauma caused by the storm, combined with the ever lingering post-storm fallout, including the uncertainty and rising costs of the property and flood insurance markets, is understandably more than some people want to handle at this point in their lives

Fortunately, as some people are choosing to leave our area, we continue to see a lot of new out-of-town buyers still looking to move here Some of these buyers continue to move here from the east coast of Florida, wanting to get away from the overcrowded, fast-paced lifestyle in the greater Miami area, while others are escaping from the high taxes, high crime and various social issues negatively impacting their lifestyle in other parts of the country. Many of these out-of-staters still have the severe COVID lockdowns they experienced in other parts of the country fresh on their minds, and whether you agree or disagree about that topic, they liked the way Florida handled it and they would rather be “stuck” living here than where they lived during COVID

On a national level, we continue to hear the mantra that the real estate market has a massive shortage of available inventory, and that the lack of housing supply is helping to maintain home prices at a higher level than one might expect after mortgage rates have surged higher Because of the run-up in home prices in the post-COVID housing boom and the dramatically higher mortgage financing costs, many would-be buyers have been forced out of the market because of affordability issues At the same time, many would-be sellers feel “trapped” because their current mortgage rates are so low that they have no desire to sell their existing home to buy a new home at current mortgage rates that are more than twice their current rates, not to mention the generally still high home prices It would also be unlikely that a seller could find a comparable home to rent for less than their current mortgage payment, so the lack of sellers remains a big issue in various parts of the country

Our local market appears to be different from the national market, in that we had a severe shortage of inventory several years ago in the market boom tied to the post-COVID reopening when virtually every home would be sold in a matter of days, if not hours, after coming onto the market Back then we referred to it as a “just in time” inventory as multiple buyers would aggressively descend on every new listing as soon as it hit the market creating a buyers feeding frenzy and bidding wars Today, our inventory of homes on the market in Cape Coral is much higher and growing by the week, as many homes sit on the market unsold for substantially longer periods of time hoping to attract an offer from a buyer Our current market resembles the market’s of 2018 and 2019, when we used to write about an oversupply of overpriced homes and a short supply of “reasonably-priced” homes

In

Today, as with back then, buyers have turned patient and will not overpay for a home Most buyers are telling us they want a clean, move-in ready home that has been well-maintained and preferably updated, at a reasonable price to the current market If a seller prices their home correctly to the market, it will get a brief flurry of showing appointments almost immediately and it will typically receive a solid offer within the first week that it is on the market. A solid offer is usually anywhere from full-price to 5 to 10% below list and negotiated from there As a seller, if you are not getting any showing appointments, the clock is ticking and it will probably require a price reduction to attract interest

Looking at our current market, as of Tuesday, Aug 8, we reached 1,800 active listings in the MLS for Cape C o r a l s i n g l e - f a m i l y h o m e s r a n g i n g i n p r i c e f r o m $210,000 to $3 895 million The second lowest-priced home in the Cape was at $249,900 and the current medi-