True Gotham

Readers of TrueGotham know how excited I have been about the apparant win-win-win formula that comes from raffling a house.  The owner gets out from under a mortgage, a charity benefits from the money raised above and beyond the mortgage  or appraised value amount, and the winner gets a home for the price of a raffle ticket.  I have absolutely acknowledged that the winner also has to pay taxes on the winnings but never dreamt that would be such an obstacle. 

First, I'm very sorry to report that it seems as if more than 90% of attempted house raffles have failed.  In Maryland where the SanMar raffle of a house in Hagerstown was a "success," the 10th house raffle of the year is being attempted and according to the Maryland secretary of state's office only the one in Hagerstown, has been "successful" so far (via Washington Post). 

So what defines a successful house raffle.  In my opinion it would be where the mortgage is paid, the charity makes money and the winner can either afford the taxes on the winnings or sell the home for a profit above and beyond the tax liability.  So by that definiton, the Hagerstown raffle was NOT a success...at least not yet.  Check out this report on the SanMar raffle winner from WJZ-TV in Baltimore:

Kelly McPherson reports selling a house is getting tougher, even if you won the house for a $100 charity raffle.

That's what happened to a Hagerstown man earlier this year, and now he's stuck with a house he can't sell to cover the costs of his win.

Who would have thought that winning a home in a charity raffle would turn out to be a curse?

"Up until last night, I never regretted buying the ticket. Now I'm a little worried," said Dennis Weaver.

A sad ending to what appeared to be a wonderful story.  With many housing markets across the country still in decline, the risk of winning a home that's value can quickly become less than the tax liability may become a reality.  When I purchased my tickets for the Hagerstown home, I first saw it as an opportunity to help SanMar but I also thought that if I won, I would be able to sell the home for about $50,000 more than the taxes due.  Thank goodness I didn't win!  Because of this tax issue, many are coming up with creative ways to circumvent this problem.

New Jersey resident and homeowner Jacquie Davies has come up with what may be an ingenius way to conduct home raffles without the burden of the tax liability on winnings.  On her web site ownahomefor100.com she asks that "entrants" pen a 50 word essay on what homeonership would mean to them and their family and send a $100 "gift" for the opportunity to be selected to purchase her home for $1.  It's a very interesting design and she is donating part of the proceeds to Save The Animals Foundation.   I wish her the best of luck as she is even considering petitoning congress to change the laws regarding house raffles to enable more homeowners to avoid foreclosure. 

It remains to be seen if someone will develop a way to truly make the house raffle a win-win-win and a viable means for underwater homeowners to move on with their lives.

Ending up with a "white elephant" prize definitely doesn't sound (or feel) like success, even though the raffle was run well and the non-profit reached their ticket sale goal.

Living in Maryland, I'm very disappointed to see that the San mar isn't ending well for the winner. With a 0% - 10% success rate to discourage the non-profits, and this article to discourage ticket buyers, we may not see 10 more house raffles next year!

Hi Doug, wishing you a belated Happy New Year. I'm checking in with a progress report which hopefully will prompt you to write a little something on the happy truth about house raffles! The holidays didn't help, but things are going pretty well all in all. If I could get TV/radio to pick up the story that would do the trick.

I'm working on the Petition for Congress & I've had so many people e-mail me in support of the effort. If any of your readers has any tips for Petitioning Congress, please pass them on.

As a side note, I've been beseiged by homeowners from all over the country aking me to do modified house raffles for their homes, so I'm in the process of setting some of these up as well.

Thanks for your mention in True Gotham, I just wish the article had a different title!

Since the real estate market has shifting from a sellers market to buyers market, hedging could have improved a real estate investment portfolio, if home owners had thought about this before the values of their properties dropped. This idea makes very good common sense... You can bet, If banks chose to do this, there is an advantage...

I am also interested in raffling a piece of property that I own in California. I own 3.28 acre parcel with a work/storage shop on the property and a well. I own the property outright, but cannot sell it for what I paid. If you could get the federal government to allow something like a raffle for homeowners that would be great and not have to join a charity in order to do this. Make it so the winner would not have to pay any taxes on the property until they sell it. Previous owner could use the winnings to pay off the bank to prevent a foreclosure.

Look at all the money that the government has been throwing at large companies.

Has anyone heard of Lakefront property being raffled successfully? (no house)
My husband and I bought property about 2 years ago with the intentions of building a home. With the economy in shambles and my husband being a self-employed Drywall Contractor, we are struggling to make ends meet. No laws protect him from the thousands of dollars that builders owe his business and we have lost a years worth the income. If were were able to raffle the property and give proceeds to charity, it could save us from financial ruin.

I was scammed by an internet job offer the week of January 15th, costing me $58,000 in charges against my bank account! I do not have that kind of money so I am forced to sell my beautiful log home in the foothills of the Mountains of Wyoming, any way I can (or file bankruptcy). The raffle tickets tied in with a contest is a great idea-just don't know if I have 77 days. My question is are there laws governing selling tickets across state lines? And has anyone had luck selling by an auction??

Toni

Where is the property located? We might want to buy.

Most successful raffles don't actually end up turn over the house. The winner gets the choice of the house or a cash amount. Even that doesn't guarantee success if it isn't marketed well.

If anyone wants to see a site that lists various raffles go to raffleindex.com