Low Entry Fee
Give To Charity And Win
Many people put off buying a house because of the cost of the down payment coupled with closing costs and high monthly mortgage payments that include taxes, insurance, and interest. Yet the "American dream" of private ownership spurs us on to acheive house ownership. A novel way to approach the financial challenge is by entering a "house lottery".
A house lottery is a contest that chooses a winner at random from entrants who have completed an entry form and submitted a nominal fee. Instead of going through real estate, the seller in conjunction with an authorized organization creates a contest. The contest is a lottery. The small fee paid by entrants allows them to compete for the house and allows the seller to get paid for his house. The winner is chosen randomly. Each entrant has an equal chance to win, and the odds of winning are determined by the number of entrants.
You may be suspicious and think this is a scheme. (Most are legitimate but always be diligent and check for yourself.) Why would the owner not put his property on the market with a real estate agent? There are several good reasons for the owner to skip the conventional sales method. If home values are down, it is hard to sell a house and even harder to get a high asking price. Selling in a down market can erase any appreciation value and even bring in less than was originally paid. If it was bought when prices were high the owner needs to recoup that money. A lottery creates an opportunity to get more than the current market value, depending on the number of entrants. The selling party goes through a charity or other organization which helps with paper work and legal restrictions. The home owner has the right to cancel the lottery and return entry fees if a minimum asking price is not met. Another reason to circumvent conventional marketing is to increase the field of potential buyers. Potential buyers may not look at a house that they feel is out of their price range, but they can afford a small entry fee and may decide to vie for the house through a lottery.
Other house lotteries may incorporate some type of competition, such as writing an essay. Specific rules must be followed - including correct spelling and grammar, word count. format, and creativity. Again a small fee and application may be required. The advantage to this type of lottery is that it is based on ability and compliance to rules. For well qualified entrants this increases their chance of winning.
Another type of lottery is a sweepstakes, such as Publishers Clearing House or HGTV. There is no fee to enter. The benefit to the sponsor is advertisement, so the requirement to enter may be to follow simple but tedious instructions that are a form of advertising. No purchase is required. Chance of winning depends on the number of prizes being offered and the number of entrants. Chances are highest for winning small prizes and lowest for winning large prizes, like a dream house.
Giving to charity, such as the Mater Foundation, can qualify you to enter a house give away for as little as two dollars.3] Charities are legally allowed to hold a lottery. Houses and other goods can be donated and then raffled with proceeds going to the charity. Homeowners who are interested in a house lottery need to go through aa charity or other authorized organization. The charity or other group keeps money that exceeds the agreed upon price for the house. This way the owner gets his sale price, the charity gets any excess money, and the winner gets a free house. And donating to charity is a win for all.
Be aware that with any "win" you will have taxes and fees to pay that will vary depending on personal income, state laws, etc. See a tax specialist and/or financial adviser to clarify these questions if you are a winner. If you are selling a house and want to hold a lottery, contact an authorized organization such as a charity or senior citizen group. They will help with the legalities and the organization that is needed.
Disclaimer: The author is not a financial adviser and is not giving financial or tax advise. Always check the validity of any contest. Scams do exist.