Home Raffled for $50 in Maryland. New way to sell property in Hawaii?

By
Real Estate Agent with Hawaii Life Real Estate Brokers
I was watching CNBC tody and heard of a story where a desperate seller in Maryland decided a new approach on selling his home: Sell 31,500 raffle tickets for $50... Would this work in Hawaii? Initially my thought would be yeah, people would be all over this since so many people flock to Las Vegas to gamble. Then I realized that's why they go there: gambling (essentially what this is) is illegal in Hawaii. In this circumstance, they are selling these tickets with the "opportunity" to win a $1 million + home. That is also why we don't have a lottery here... Oh well, someone in Maryland will be a happy camper in the new year if they can actually buy a $1 mil. home for $50 bucks :)
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Rainer
775
Stacie Shirley
Currently Inactive - Meansville, GA

I heard something like that in a movie once, I think it was Fried Green Tomatoes. They had a contest and you had to pay an entry fee and write an essay on why you would want to own....I think it may have been their restaraunt or maby a historic home, I cant really remember.

It sounded like a great idea and a great way to get yourself noticed. Not sure if thats legal in Georgia or not????

 

Dec 31, 2008 04:13 AM #1
Rainmaker
329,338
Gerry Khatchikian
Red Lodge, MT
ASA, TRC, SFR

I just visited the website.   They have currently sold slightly above 21,000 $50 tickets.  The drawing has been rescheduled from December 31st, 2008 to January 23, 2009 in order to sell the 27,000 needed tickets.  There is also a second prize of $10,000.   Thank you for sharing the news.  Let's hope there are not too many more homes being raffled in 2009 as they will ultimately result in loss of business for Realtors in the affected markets and make it even harder to stay in business.  Have a very happy New Year!

Dec 31, 2008 04:14 AM #2
Rainmaker
340,047
Robert May
Verico Canada First Mortgage/ Rainbow Realty - Lethbridge, AB
Real Estate Expert & Mortgage Broker- Lethbridge

i have seen this attempted dozens of times.  It is always shut down by authorities as an illegal lottery or else the tickeet sales are never achieved and it never happens.  I have never heard of a single case of these type of larks working.

Dec 31, 2008 05:46 AM #3
Anonymous
Anonymous
Fred R

Aside from being illegal in all states unless registered and conducted by a qualified non-profit (even then the number of states allowing these is limited) these home raffles offer false hope to those trying to unload their houses.  Nearly all result in failure. 

For ten years I developed and directed a home raffle program for a national non-profit organization - giving away over 160 homes during that period.  I can tell you that these raffles are extremely costly and complex and have to be intensly marketed.

Additionally, think about this...In today's declining housing market, individuals will be more hesistant about buying tickets for the following reasons:

* Winner will have to pay 30% of appraised value, up front, to the IRS in order to accept the prize.  The Hawaii home, valued at $1 million, would require a $300,000 tax payment.  The winner would most likely have to obtain a mortgage for that amount and it is doubtful that they would qualify for such a loan given the current mortgage crisis.

* In addition to paying income tax on the prize, the winner will then have to decide which house to keep - the one they currently own or the prize home.  Again, in the current environment, it could be very difficult, if not impossible, to sell either home.  That would leave the winner with an additional mortgage payment, property taxes, property insurance (which is much more expensive for unoccupied homes), association dues, maintenance, etc....Truly a negative cash flow situation. 

It has been said that you should be careful what you wish for because you migth get it.

A milliion dollar home for $50????  I think not!

Dec 31, 2008 09:50 AM #4
Rainmaker
140,099
Kimo Stowell
JDS Consulting: Decor Design and Merchandising - Honolulu, HI
Real Estate Merchandiser

Aloha David,

Interesting comments. With the legality of such a scheme set aside, there are too many variables and too small a population for this arrangement to work for a seller here in Hawaii. Buyers would be taking an even greater risk should they 'win' the property especially since the costs associated with maintenance and taxes does not take into consideration the winners ability to pay these costs. If it's too good to be true it usually is-

Peace,

Jan 21, 2009 03:47 PM #5
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Rainmaker
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David Buck

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