Can you see anything wrong with this?

[Jogeephus]

I have a friend who is having to move to Fort Benning and he is married and owns his own home. As we all know the economy is bad and he seems to be having trouble selling his home. His home is simple, functional, rustic and nice with a couple of acres in a good area. Under normal times he wouldn't have any problem selling the house but these aren't ordinary times. He isn't trying to get rich off the property but doesn't want to lose money either but it looks like he is going to have to reduce the price to get out from under it cause having to pay rent and a mortgage is putting stress on he and his wife. The realtor told him he could get $130,000 for his house but he hasn't had the first call and he only has 3 months left on the contract with the realtor. The realtor is asking 8% and seems to be suggesting that he lower the price. (imagine that)

Anyhow, he's fairly young and he could lick his wounds and move on but he dropped by to see me yesterday and I could tell he was kinda stressed about the thing and asked me some advice. I empathized with him then all of a sudden the little grey cells jumped into motion and I came up with this idea based on what I saw a local gov't do with a piece of real estate they had on their books.

I suggested that we put together 260 tickets and sell them for $500 apiece. These tickets would actually be legal contracts or promissory notes describing the terms and agreeing that the bearer would be given the title to the house if drawn. The money would be paid to a third party such as a bank or an attorney and put in escrow until the drawing. The drawing would be a reverse drawing with the last paper pulled being the winner. This way, everyone would be assured their name was called and to allow for some fun in the process.

The drawing itself would be held at a big BBQ put on by him (and I volunteered to help) where everyone buying tickets would be invited. Door prizes would be given out on say the 50th, 100th and 150th name read but after say the 230th name was read the remaining 30 people would be asked to move to one area and they would be given a few moments to bargain amongst themselves for tickets if they desire. This would happen again with the last 15, 7, 3 and 2 people until the one is selected.

IMO, I think this would work well. Heck, I don't gamble but I'd be willing to risk $500 for a chance to own this house and to those who frequently play Georgia Lotto this would be right up their alley. For him, I think this will insure he gets what he wants for his house and with a fraction of the savings on the realtor cost we could have one heck of a BBQ and a good time and someone would get a really nice house for next to nothing.

What do you think? Any suggestions? If this happened in your area would you be interested in taking the chance?

Thanks.

 

[keysbottles]

Sounds like a good idea to me. The main problem I see is finding 260 willing people with $500 "cash" in their pocket,,,cash being the key word. Raffles are popular in my area but on a smaller scale i.e. $5 ticket on hunting rifle. Good luck.

 

[Anonymous]

I think its a decent idea, but he needs a lawyer to draw it up so it can't come back on him. Make sure he figures in costs, lawyers fees, etc. And he won't be able to do anything until he's out of contract. In Fl, if the winner turns out to be a person shown the house by his former realtor, the realtor can make a claim for the commission, even after the fact.

 

[Anonymous]

And he'll need an out clause if he doesn't sell enough tickets

 

[alisonb]

I would make sure it qualifies under your Gaming/Gambling Act (don't know what you call it over there) and meets all their requirements. You don't want to get halfway through with something like this and have to backtrack or cancell because the Commission sees it as an illegal lottery. A raffle of $500 may be a bit high.
Good idea, perhaps I should buy a ticket .

 

[CottageFarm]

It's a great idea! :clap:
I love how Realtors' 1st recommendation is to reduce the price, but they never offer to reduce their fees.
But yes, some words of caution.
Realtor needs to be bought off to release the contract. Increase # of tickets to cover a reduced commission payable upon completion of transaction. Say, $4000 - $5000 ?? total. No percentage, but contract ends now with no retro clause.
Lawyer definitely needs to be involved. Needs to be a Real Estate Specialist.
Money needs to sit in Escrow with a title company.
Could be some issues with Mortgage holder. That one is a big unknown to me since they have security interest in the property.

 

[I luv herfrds]

I see nothing wrong with it. I've seen ads for a house raffle in California for the special Olympics.
as has already been said get a lawyer involved and find out if it can be done. Cover all the bases.

 

[Angus Cowman]

St Judes does this every year in springfield Mo
the raffle a new house worth around $250,000 but since they are a non profit they can get by with some of the legal BS that your friend may not be
I think it is a wonderful Idea
keep us informed of how it goes if he decides to go thru with it

 

[1982vett]

I have a friend who is having to move to Fort Benning and he is married and owns his own home. As we all know the economy is bad and he seems to be having trouble selling his home. His home is simple, functional, rustic and nice with a couple of acres in a good area. Under normal times he wouldn't have any problem selling the house but these aren't ordinary times. He isn't trying to get rich off the property but doesn't want to lose money either .

One concept folks don't seem to grasp...sure you may be selling a house into a depressed market...but on the flip side of the same token you are also/probably buying into a depressed market...so any "loss" is a wash...a sideways move unless the housing market in the area you are moving to is stronger or more expensive than the one you are leaving. That scenario actually comes into play when the economy is at it's strongest....ie..moving from Arkansas to Washington D.C. :mrgreen:

PS...Tell him to hope it doesn't sell under an 8% contract...and find a realtor at 6%... $130000 property doesn't need all the bells and wistles 8% is supposed to buy...JMOP

 

[Jalopy]

It was done in southern Iowa on 160 acre farms in the 80"s. They had $1000 buy ins and if you didn't win you could write it off as an expense, or so the ad said. I know according to newspaper article at the time one farm "sold" but another had to be canceled due to lack of interest in the tickets. I think that in your idea that the extra prizes and enticements may make it more of a gaming rules problem rather than a business venture and may cause more concerns with legal problems. Sort of a catch 22 because the added attractions could entice more people but could cause more scrutiny by gaming laws. Good luck to him !

 

[alisonb]

I wonder what the tax implications would be??

 

[TexasBred]

This process might actually eliminate the realtor since the house would not actually be "sold" (check with an attorney). St. Jude's "gives away" a brand new home every year in the DFW area by selling "chances". A great fundraiser for them and a bargain for the winner.

 

[cow pollinater]

My father is an ag real estate broker and I've bought and sold a few places myself. Based on what he's told me and a few bad experiances that I've had myself, I'd keep my $500 in my pocket and go buy a place for what it was worth with a standard escrow that really binds the seller legally to the original agreement that we had hammered out.
While you do have a great idea and I respect you for helping a military family(and that last part might be enough to get me on board), I would turn and run as an invester just because you're in new and unusual territory... to many unforseens for an investor to worry about. I can see that it SHOULD work, but I'm not willing to gamble even $500 on the ability of someone that I don't know to make sure that it does work. It goes bad often enough even in a regular escrow
Charity groups can get away with a liitle more since they own the homes outright and they have legal advice readily on hand and investers know that this is not something new. I addition, they have the advantage of people ready and willing to give them money outright whether they get a home out of the deal or not.

 

[cow pollinater]

Also, tell him to tell his realtor where to stick it. :mrgreen: Some of the best in the business get only 6% and they start and close at the same price that they list.

 

[Suzie Q]

I am on the other side of the World so things are probably different here.

Here there are rules about raffles and where the profit goes to. Usually non profit organisations, not an individual.

Over here I suggest that you never ever sign exclusive with a Reals Estate Agent, this is ONLY my opinion, but if you sign exclusive for a Real Estate Agent they can sit on their bums and do nothing. If it sells they get their commission, if it doesn't the price will come down and down until their friends and family can buy it at the price they want it for. Again only my opinion.

If you take the third option where only the person who sells it gets the commission. Then they have to get off their bums and actually do some work or lose out. JMHO.

 

[Jogeephus]

The way I visualize it working would be to have an attorney draw up the contract agreement/receipt for the $500. Each agreement would be sequencial order and each would be numbered like 25 of 260. Agreement would also have an out clause with a given time period in the event not enough people bought tickets AND a time period since it doesn't need to drag on for years. Also a redemption clause if you had a change of heart you could back out, turn in your paper and be refunded the money. Also, these agreements could be handed out at the bank and the bank would handle the paperwork and collect the money and put it in a specified account. As I see it the key is transparnacy since this is something a little different. We talked again today about it and if the house isn't sold in the next three months the realtor's contract will be up and we/he can look into trying it this way. Will first start with an attorney cause this may be considered gambling and it may be that only our state and local government can practice this. Personally, I wouldn't have a problem at all risking $500 for a chance at this house or any other if I knew it was being handled properly and by honest people and businesses.

a sideways move unless the housing market in the area you are moving to is stronger or more expensive than the one you are leaving

He's gonna need every cent he can cause he'll be moving from a three street light town to one with hundreds as well as a growing population compared to a shrinking population of our community.

 

[slick4591]

Just a suggestion, but ask the prosecuting attorney for your jurisdiction first. Their legal opinion will be free and that way you'll know whether to spend money on a lawyer.

 

[Jogeephus]

Just a suggestion, but ask the prosecuting attorney for your jurisdiction first. Their legal opinion will be free and that way you'll know whether to spend money on a lawyer.

Its a small world if you folks in Texas have even heard he's out of prison now. Sure wasn't much time served for the sentence given and I always thought you served all the time on federal sentences. :lol2: Sorry, I couln't help myself. :tiphat:

Oh well, its a mute point cause this is illegal under section 16-12-22.1 of the Georgia law. You have to be a non-profit organization and the tickets can't be more than $100. I knew it was too good of an idea to be legal. We can't gamble in this state. Except for the lottery of course but that's different.

 

[Cattleman200]

If it was legal for an individual to do it IMO it would be easier to sell 1300 tickets @ $100 than 260 @ $500. In our area several of the Quarterback clubs at local schools give away a truck each year like that. They work with the local dealers on cost price and sell enough tickets to clear $10,000. The winner can take the truck (usually like a small ford or chevy truck) or has the option for the dealer to give them $10,000 back for the new truck. The tickets are $100 and they always sell out. Each ticket also comes with a BBQ plate dinner before the drawing.

Circle H Ranch