A New York City couple who wanted to buy a large Scarsdale house claims that Houlihan Lawrence Inc. real estate brokerage jacked up the price by manipulating the reported square footage.
Changhe Yuan and Wei Xie sued Houlihan Lawrence, broker Eileen L. Brennan and sellers Douglas W. Losordo and Tina Thorne, to get back a $256,000 down payment that the defendants allegedly refused to return after a $2.56 million deal collapsed.
Changhe and Wei wanted a house of at least 3,000 square feet, according to the complaint filed Sept. 6 in Westchester Supreme Court. Brennan and the sellers allegedly listed the 2,629-square-foot house on Carthage Road at 3,626 square feet.
The sellers had included a finished basement as part of the gross living area, the complaint states, in violation of appraisal standards. By increasing the square footage, the price per square foot appeared to be $579 instead of $798, and was lower than the average of $690 per square foot for similar houses nearby.
Had they known the true size, the couple claims, they “would not have looked at the property, let alone signed a contract and walked into such a fraud.”
Houlihan Lawrence states in a response to the allegations that is has dutifully served its clients for over 130 years. “We are confident in our business practices and continue to represent our buyer and seller clients with integrity.”
The house in question is a four bedroom, 3.5 bathroom colonial built in 1987 in the Five Corners section of the village.
The house had been listed at $2.1 million, according to the complaint, but Changhe and Wei agreed to pay $2.56 million after Brennan said there was a bidding war among 13 buyers.
Now the couple thinks the bidding war may have been artificial, created to hype up the price of the property so that unwary first-time, singe-home buyers like them “would fall into the trap.”
Brennan listed the sale as an all cash offer, according to the complaint, even though the couple did not have that much money and they had applied for a mortgage with Citibank.
After they signed a contract in April, the multiple listing service listed the house at 2,629 square feet.
A week later, Citibank refused to execute a mortgage, after its appraiser calculated the square footage at 2,629 and estimated the value of the property at no more than $2.1 million.
The couple notified the sellers that they had insufficient funds to buy the house without a mortgage, questioned the square footage, and asked to cancel the deal or reduce the price.
A few days later, the square footage was put back at 3,629 on the multiple listing service.
On June 6, the sellers offered to lower the price to $2.19 million and asked Changhe and Wei to waive any claims concerning the square footage or valuation, which the seller “vigorously disputes.”
Even at the reduced price, according to the complaint, the couple did not have enough cash for the deal and they refused to sign.
The sellers put the property back on the market on June 10, at $2.1 million, without notifying Changhe and Wei, the complaint states. The couple asked to cancel their deal and asked for the down payment. The sellers refused.
On June 15, Changhe and Wei agreed to buy the property for $2.19 million and waived the question of square footage.
The deal was scheduled to close on July 6. But on July 5, the complaint states, the couple “came to realize that they had been cheated.”
They asked to cancel the deal and get back their down payment.
The owners put the property back on the market at $2.1 million and listed the square footage at 3,629.
The house sold for $1.95 million in mid-September, according to real estate web sites.
Changhe and Wei are demanding the return of their down payment and other unspecified damages. They are represented by Queens attorney Brian S. Yang.
