Well, it seems the sellers and their representatives have discovered this blog.  The other day our agent forwarded us the following e-mail:

From: Perry Henderson Real Estate – Go Green and Live Well
Sent: Tuesday, March 24, 2009 1:39 AM
To: Sheri Mitchel
Cc: John Cochran
Subject: http://www.605peacock.com/

Sheri,

I’ve been notified that this blog is advertising the experience of the buyer for Unit C. I know that people get angry when they don’t get everything they want, but this is way over the top and just not an accurate representation of what happened…

Please have them one of the following:
1. Let the Seller publish his side of the story
2. Remove it altogether.
3. At a minimum, remove any factual errors.

Are you able to help me with this?
Perry

I told Sheri that everything in the blog was 100% backed by e-mail exchanges with the seller.  I asked her to have them contact me directly if they had an issue w/ the blog as it was not fair to involve her in this.  I put this blog up because I was appalled that the seller would try to steal our earnest money given that we were well within the option period.  In addition, I had been amazed by the events that happened during he process and felt like it was a micocosmic reflection of the entire real estate bubble.  It seemed to me that the agent and the seller were still operating under an extreme bubble mantality and I thought it would be interesting to document it.

That said, they did get in touch with me sending the following e-mail:

On Mar 25, 2009, at 12:27 PM, Perry Henderson Real Estate – Go Green and Live Well wrote:

I’m not getting caught up in this nor trying to be combative but here’s where the seller is coming from. If we need to proceed any further, frankly I think it’ll be totally creepy. Do the honorable thing and move on.  If you really need examples, here are the ones I’ve been told to inform you about.

Example #1:
The buyer could have said that they found a laundry list of repair items in the inspection. What it doesn’t say it that that the seller paid for completed the repairs as soon as humanly possible.

Example #2:
The seller requested meditation, to sit in front of the the buyer to discuss the release of EM and the concerns. The blog version doesn’t reflect this.

Example #3:
The comment system is not on, wasn’t on ever, etc…  see screen print<Outlook.jpg

I informed him in the interest of full discolsure I’d be glad to post his criticisms.  Obviously #3 is just plain wrong.  If you click on the post title or the word “comments” you can comment on any post.  This is an open blog.  Regarding Example #1 and Example #2, I will post separate entries addressing each one from my point of view.

Wow, just when you thought the story was over, it goes on…

Just received word from our Real Estate agent that they are now refusing to pay the inspection fee that they promised.  If you recall (you can read about it in earlier posts on this blog) the first time and second time the inspector went to the unit the gas was turned off.  This meant that he could not do his inspection.  As result, the seller was due to pay for the return visit.  It was $75 – a fraction of the fee of the original inspection which the buyer pays (and we did, promptly).   They are falsely claiming that they only agreed to pay this if we closd on the property.  Not only is this not true, but it’s completely not standard practice.  If the inspector encounters an impediment to the inspection, it is normally the sellers responsibility to pay for the return visit.

This is the e-mail that was forwarded:

From: Perry Henderson
Sent: Wednesday, March 11, 2009 10:16 AM
To: Angela Skloss; Sheri Mitchell
Subject: Re: Invoice

He agreed to pay it if he closed. He did not. Frankly, This is getting rediculous and to me seems little abusive. Do not come back to me and ask this again.

As you can see, not only do they refuse payment, they accuse us of abuse for asking for it.  Incredible.

In an act of good faith and because I don’t think our excellent inspector should be dragged into this, I have agreed to pay his invoice.  Absolutely shocking that the seller would refuse to pay and even more shocking that Perry Henderson and his Prudential backed agency would send such an outlandish e-mail and stand behind this decision.  A real show of character and integrity.

Just got word on Friday March 8, 2009 over a month after the contract termination was signed and delivered, that the seller has released our earnest money form escrow.   We ultimately had to have an attorney to write a letter demanding the release of the earnest money or threatening to sue for 3x the amount as is outlined in the contract if either party fails to release the earnest money.

I must say, I now feel a sense of closure to all of this.  In the mean time, we have rented a place in Austin to move into over the next month.  There have been several lessons here, not the least of which is that buying a home sounds great, but you never know what can happen.  These things end up consuming much more of your time and resources than you might initially imagine.  In a volatile year where we are having our first child and making a move back home, we have chosen the path of least resistance and least distraction to focus on ourselves, our business and our new addition to the family.

Also, after having picked out an unlikely living situation (we rented a place in the Monarch, one of several new down town high rise buildings in Austin) I realize that 605 Peacock Ln probably was not the house for us.  I do still think these are all very nice units and I think they would make a great home for some lucky family.  But, our direction is a bit different.  We are unsure how long we are going to be in Austin.  We like the down town proximity, walking distance to the office, etc.  We like being able to leave town and know that our place is secure in a building.  We like the covered & secure parking.  These are all things that would have been desired if we had moved forward with Peacock Ln.

I started this blog out of anger that the owner would steal our earnest money in such a dishonest move.  It seemed to validate everything I had perceived about the seller during the process.  I have come out of the situation, however, with more clarity.  It was not just the actions of the seller that turned me away from the peacock four.  It was also my own hesitations, in that it simply wasn’t exactly what we were looking for.  This is the home buying process.  I will say that had the sellers acted differently, especially early on, I would for sure be living and an owner of one of the peacock four.  So in the end, I guess I owe them a bit of gratitude for being difficult as it steered us where we are and what we’ve ended up with is more in line with what we need now.

A note to the sellers, if they ever happen to read this.  Be aware of how your actions and words line up.  It’s understandable, especially in this market, that you are in a hurry to sell.  But, don’t be a bully about it.  The buyers that you’re going after are making a step into a home.  You would not typically get investors or seasoned property buyers for these units.  They are good “starter” homes.  And, if the buyer is going to purchase them in this market they are going to want something that is perfect and ready to move into.  In the end you agreed to most everything we asked, but we had to terminate the contract for you to do so, if in the beginning you had agreed to half and not pushed back so much, the property would be sold.  It is unclear how much of this came from you vs. your agents.   Angela seemed to be very nice and  accommodating, but whenever Perry would get involved things seemed to get derailed.

A great big thanks to everyone on our team.  Sheri Mitchell at Southern Exposure Realtors, you are truly a joy to work with.  Your patience and diligence throughout this process has been above and beyond.  When we do buy a place, you are our realtor without a doubt.  Randal Pitts at Home Inspections Austin, you are diligent, thorough, knowledgeable and curious.  Everything one could want in a first rate home inspector.  Elliott Mitchell, it’s never fun when you have to involve attorneys in a home purchase.  Thank you for making the process, easy, smooth and stream lined.  All we wanted from the outset is to get our earnest money back and your well worded letter was what did that.  We could have wasted a lot of time and money w/ a more forceful approach. Your scalpel was able to get the exact result we wanted with a minimum of effort.

If you are someone considering buying a unit at 605 Peacock / one of the peacock four then I have a few words for you as well.  These posts are my experience and my impressions.  In retrospect, I think the units are very nice and are being offerred at a good price.   I think the seller is a bit desperate and that came off the wrong way at times during our process.  I would be dilligent, get your own read on things, but don’t let my experience dissuade you.

At the time of the sale, we were purchasing this as a condo unit.  The day after we backed out, they informed us they were going to be converting to town homes.  This would have particularly upset me had we moved forward as:

1. The mortgage we had lined up was for a condo, not a town home

2. Under the town home model, each unit owns the land it is on.  This would have instantly made the back units more valuable as they each have a nice size yard.  The unit we were looking at was one of the front units.

That said, some questions that I never received answers to:

In reading over these, one thing I’d like to understand from the seller is what the property taxes are on the common elements.  This is part of what the association fees cover and would seem to be one of the larger expenses.  However, I have no idea how to find out what the valuation of the common elements are and/or what they are taxed at.

In addition, can we find out who covers the “unsold” units – I’m assuming it is the seller and they contribute the same per unit into the association fee as we do… is that right?

Again, just more things leading to the perception that something was not right.

One piece of advice we got from a real estate investor that had a lot of experience in buying new constructions was to insist on a two year builders warranty.  We had put this in our list to the seller from day one.  They had constantly pushed back on it.  The reason sited was that they were already taking a loss on the property and just wanted to be done with it.  They didn’t want to have to deal with things down the line.  We heard this so much from the seller, we decided that we would give them an option to sell “as-is” with no additional work and no warranty.  The price we had agreed upon as previously mentioned was 330k.  We decided to offer them an option for 305k completely as is – we would take it and they would have to do nothing.  That offer was flat out rejected, which said to me that they were just making excuses for not wanting to give a 2 year builder warranty.  If you really “just want out” a 25k concession is not much.

After the rejection of the as-is offer we were more intent than ever on a 2 year builders warranty.  There was a lot of push back and they would not concede.  After some discussion we decided that the actions did not match the words and that further left an impression of dishonesty which we did not want to be involved with in a real estate transaction.  Even if they did concede the two year builders warranty, how much would we have to fight with them for any little thing?   As a result, we elected to terminate the contract.

The seller seemed shocked.  They immediately came back and agreed to everything.  With the exception of putting in a cover for the fire place (how bizarre??).  We seriously considered this, but in the end it was too late.  I have a strict policy of doing business in good faith and I simply won’t do business with shady or dishonest people.  I can’t say for sure these people were either, but it certainly left that distinct impression.  As a result we decided to push through with the termination of the contract – being well within the option period, we would simply lose the option fee of a couple hundred dollars and the seller could move on w/ finding other buyers.

Things didn’t quite work out that way.

The inspector returned for the second inspection and the gas still wasn’t on.  For the third inspection, he was able to complete the report.  At this point there were only a few days left in the option period. The seller was demanding an immediate punch list of what we wanted to be fixed to close the deal before the option period expired.  I’ve been through enough home purchases to know that rushing things is never a good idea.  We insisted that the option period be pushed back.  We sent several contract amendments as to such and never received any back.  Finally, 24 hours before the option period was to expire we threatened to terminate the contract.  At that point we got our option period extension.  It was exactly this type of consistent push back that would eventually drive us to back out of the deal.

We spent the weekend reviewing the inspection report.  All sorts of things were very weird.  As an example, they had put in a walk way and they had put in a gate, but the two didn’t match!  The fence was completely in the way of the walk way and the gate was in the middle of the yard.  In addition, they had put drainage and the sprinkler heads, right next to the foundation, which can cause shrinking/swelling/cracking over time.  There were several additional issues.  I will say, nothing was major and these all could have been fixed in a relatively short period of time.  But, it was a long list. So, we took the time to prepare a very detailed list of what needed to be fixed and sent it back as an amendment to the contract.

In the mean time the housing market had continued to degrade.  The stimulus plan touted by the federal government was reportedly going to have ~15k in incentives for home buyers (the final plan only had about half that).  The response we got back on our contract amendment was laughable. You can see it here:

This was the crytpic and vague response to our detailed punch list

The list we sent was very detailed.  One would expect a response with each item marked done, not done w/ an explanation as to why.  Instead the above is what we received.  This further fueled our skepticism that these people were either trying to hide something or were just simply uninterested / amateurish in their approach.

At this point, it was clear that things were not being taken seriously or being done properly. So, we decided if we were going to go through with it we would need to be sure we got a good warranty and as the housing market was tumbling some concessions to potentially buy us some points on our mortgage.

The next step was to get the property inspected.  This is when it became clear that the owners had purchased a in-progress new construction and decided to finish it out themselves.  This was clear because things that were started one way were finished in another.  For example, there were ridge vents put in place to ventilate the attic.  Yet, the new owners had gone in and sprayed insulation over the venting on the underside of the roof, thus blocking it.  After some research it turns out both approaches are acceptable and “insulating” the attic along w/ the house is actually considered “more green” – so we were ok with this, but it was a red flag that things had clearly switched directions mid-stream.

One of the more frustrating things was that when our inspector went to the property, the gas was off.  As is normal per the purchasing process in Texas we paid for the inspection.  However, the sellers had neglected to ensure that the house was *ready* for inspection.  As a result, after the inspection for all things non-gas related was complete, we had to have the inspector return.  Typically, this is at the sellers expense since it was not ready the first time around.  Instead, the seller tried to make us pay for the cost of the return.  We put our foot down and they ended up paying for it.

This was how things were to be for the rest of this process. Everything we did, we got push back from the seller.  They tried to nickel and dime the process to the point where we felt that perhaps there was something else going on behind the scenes.  As I’ve mentioned the property was being marketed as a 4-plex condo-ized units.  As such, we began to raise questions, what if we buy our unit and there are still two vacant and the seller goes bankrupt?

On January 18, 2009 we found the Peacock Four.  The Prudential agent Angela Skloss of the Live Well team was holding an open house at 605 Peacock Ln. in Austin, TX in the much desired 78704 zip code.   The units were nice (some nicer than others) and we were a bit on the fence about buying first thing in moving back to Austin from Brooklyn.  However, we were intrigued by the deal that they were offering where the units would be bid on and the highest bid would win.

We discussed w/ Angela the possibility of putting in a real low bid and if the seller would accept it.  In other words, as she described it would be like an ebay auction, we asked what the reserve price would be.  She indicated it would be 250k.  The asking price at the time was 389k.  We were shocked and at that price it would be a very nice deal.  So, we did what any house hunter would do, we put an offer at 250k on two units (we liked both) and decided we’d go with whichever one we got the best price on.

The next day we get a call.  There had not been any other bids on one of them and there had been one other similar bid on the other.  They said, look, here is the situation – the seller just simply can’t let them go for that little.  The minimum they are willing to do is 330k.

This should have been our first clue.  The deal had been presnted as a bid scenario.  In a bid scenario as long as you meet the minimum and there are no higher bids, you should get the house.  Instead it was a faux bid situation and when it didn’t quite work out how they planned, they backed out.  Til this day I still see postings that they are doing yet another “bid” on these units.

Instead, we decied that 330k was still an ok deal and it was a nice unit.  As long as we got the one we preferred we would push forward.  The seller agreed and we had a contract drawn up.  The units even though they were stand alone were being sold as condomeniums.  So we signed a standard Texas Reas Estate Commission Residential Condomenium Contract.  We specified an option period w/ an option fee of $200.  And, we specified an earnest fee of $5k.  Per the contract, as long as you are within the option period you can back out for any reason and you simply forfeit the option fee, but the earnest money is returned in full.

Next is where things started to get weird… stay tuned.

In this blog I am going to try to recreate the series of events that led up to the owners of the Peacock Four trying to steal our earnest money.  We got a bad feeling about the purchase, well within the option period, primarily due to some erattic behavior by the seller.  It gave us a sense of dishonesty and given the market, we decided to not take the risk.  Almost a month later, we find out the seller is trying to take our earnest money!  Even though this is epressly outlined in the contract that within the option period we can back out for any reason and get 100% of the earnest money back.   Herein lies our story and a warning to anyone looking to do business with these people.