Real Estate Raffles?

By
Real Estate Agent with Coldwell Banker

There are a number of desperate homeowner’s trying to sell their houses in creative ways. I’ve run across a few stories in this vein.  Today, I saw this:

New Mexico couple offer home as prize in $100 essay contest

(04-19) 15:45 PDT Santa Fe, N.M. (AP) --
A couple have decided to give away their home to the winner of an essay contest. The catch: It costs $100 to enter, and the home will go only if at least 2,500 people sign up.
The state Gaming Control Board is examining whether Tiffany and Todd Lovell's contest qualifies as a raffle, which would make it illegal under state law, or a game of skill, which is allowed, said Greg Saunders, the board's deputy director.
"We haven't made that determination yet," he said.
The Lovells said the depressed housing market led them to try to move their 1,200-square-foot, three-bedroom, one-bathroom home through the essay contest. They are hoping to get at least 2,500 entries, which would net them $250,000. If they receive fewer than 2,500 entries, they said they would cancel the contest and return the entry fees.
The couple said entries would be judged by "various members of the Los Alamos County community."

My questions when I see things of this nature are:


-    How does the county determine the new property tax if you aren’t buying for value?
-    Does the winner know that they will owe federal and state taxes for this capital gain or do they think they are getting the house for $100?  If they have to sell the house to pay taxes, are they just the unfortunate ones now holding the hot potato?
-    If there is something wrong with the house, is this then a case of fraud, product liability, etc.?  Are these owners just opening themselves up for greater liability?
-    What happens if the state changes its mind after the transfer and invalidates the contest (assuming they allow it)?
-    If this works and becomes popular, how do you regulate it so that it doesn’t become just a con? How is this controlled if the entries are coming in from out of state?
-    Who determines if the prize was given away? Or given away fairly?


Comments (14)

Donna Marie Godfrey
Godfrey Properties - Pottstown, PA
Peter, it's an interesting spin on selling.
Apr 19, 2008 02:01 PM
Andy Laughlin
ConnectRealty.com - Bellingham, WA
interesting I have never heard of that.
Apr 19, 2008 02:12 PM
Brian Schulman
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552
Peter, the gaming laws in various states are there at least in part to protect the public from scams.  They're also there to make sure that the states get their cut of the revenue.  Both of these reasons make it more difficult for private parties to run raffles.
Apr 19, 2008 02:16 PM
Brian Luce
HomeStarr Realty Inc. - New Hope, PA
Associate Broker
Brian Schulman hit's the nail right on the head.  Many states do have gaming laws.  In the last 8-10 years in a very strong market, many raffles / contests didn't seem to be very successful, so I'm guessing in the "current" markets, results will be similar.
Apr 19, 2008 02:30 PM
Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT
Broker-Mentor,CRS

Auctions would be the way to go. Though, often, just listing the property for below market price will sell it.  I would suggest hiring a good accountant & an attorney before deciding on alternative sale methods.

It's a Good Life!

Fran

Apr 20, 2008 02:58 AM
Peter Wolf
Coldwell Banker - Valley Village, CA

Brian and Brian - Unfortunately, while states have laws designed to protect innocent people, there are criminal issues and civil issues.  Police can arrest scam artists for Criminial matters, but good luck with the Civil issues.  Those are costly and even if you win, you have to collect.

Fran - I always tell people that they should do their homework if they aren't sure what they are doing, but I also know that people will go against their self-interest to save money. 

Apr 21, 2008 11:15 AM
Chuck Willman UtahHomes.me
Utah Homes - Alpine, UT
Utah Homes
I think they need to say with a completely straight face, "this raffle IS a game of skill... skilled marketing, your honor."
Apr 24, 2008 05:59 PM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Good questions. I have seen the announcement. I hope buyers and sellers have the attorneys  look at all the paperwork.

Apr 24, 2008 11:19 PM
Debra Kukulski, Broker Associate
RE/MAX Suburban - Cary, IL
SRES;SFR,CDPE;GRI;ABR;e-PRO Realtor, Northern IL
Peter...lot's of very interesting questions about this issue.  I agree with Gita that it would be very important to have an attorney review everything.
Apr 26, 2008 12:04 AM
Peter Wolf
Coldwell Banker - Valley Village, CA
Unfortunately, from my experience the lawyer part usually doesn't become part of the equation though it should.  Still, unmapped territory can be some of the easiest to litigate because its a blank page.  It just seems with this many people, somebody's feelings are going to get hurt and their feathers ruffled.
Apr 26, 2008 11:00 AM
John Elwell
CENTURY 21 Bill Nye Realty, Inc. - Zephyrhills, FL
You Deserve a Full-Time Agent, Not Reduced Results
My guess is that this will not catch on at all and that those that try it, will soon wish they had thought of a different way of selling their homes. I also bet that the buyers will wish that they had used a different way of purchasing their homes.
May 02, 2008 01:47 PM
COMPASS PALM SPRINGS | Stewart Penn
COMPASS - Palm Springs, CA
COMPASS Palm Springs - Broker Associate

Sounds like a gimmick that no serious homebuyer would consider.

May 11, 2008 03:36 AM
Anonymous
bruce

what if interested parties viewed property and value to sales and fair outcome not a scam by any means was conducted property taxes paid for one year to county half fed taxes paid and seller declared sales what would be wrong with that state lotterys have spent monies that were not intendted for schools etc.. and the potential outcome woul be more realistic then anything else and someone has a new house without mortgage payments which have totaly mis led the public over the last few years

May 11, 2008 05:33 PM
#13
Anonymous
Lisa

Peter,  I am wanting to raffle my land in NC.  The laws are very unclear.  If anyone can help, please let me know. 

Jun 28, 2009 03:22 AM
#14