I’ve heard about people trying to raffle their houses, and a Google search returns a number of relevant stories, including this story from Michigan.
The idea is that the homeowner has been unable to sell the property after many, many months on the market. The homeowner then has a novel idea: offer the house as the prize for a lottery/raffle drawing. In most stories, tickets for the raffle sell for $100. These are not especially bad odds, compared to many of the lottery scams offered by your State lottery. Your odds of winning a $250k house are about 1 in 2500. Not too shabby.
Has anyone successfully bought (or sold) a house this way?
This is a very interesting scenario, from a Real Estate perspective.
Do the potential “buyers” understand the tax implications of winning a $250K house? They have to pay a significant tax on their “winnings”. Since this is a lottery the winner probably has to pay 30-40% taxes. A “gift of equity” is usually reserved for family members, and also limited (I think) in amount. I suppose the sellers could Quit Claim to the Winner, but that probably wouldn’t be satisfactory to mortgage the property in order to pay the tax bill due.
Is this legal? Of course, it should be, but it’s probably not. I can’t operate my own lottery. Tomorrow there will probably be a news story that he was arrested for fraud or some other made-up charges..