Desperate for a Sale? Raffle It Off!

There is a relatively new trend rolling across the country: Sellers who are having trouble moving their homes are using raffles in a last ditch effort to find buyers for their property.

It is poorly understood, even by some real estate attorneys, because it is not used that often. Many states have laws against it, in fact, and the process generally needs to involve a legitimate charity for legal reasons.

In Illlinois, it is legal to sell a home using a raffle. Here is how it works: A prospective home buyer needs to find a non-profit organization to run the raffle and to receive any proceeds that exceed the legitimate selling cost of the home. For example, if a home is determined to be worth $200,000, and the charitable organization and homeowner sell 3,000 tickets for $100 each, the extra $100,000 will go to the non-profit organization. The homeowner can keep the legitimate amount that the home is worth.

The real trick to this is that even though the process is legal in Illinois, the state has some of the most complex charitable gaming laws of any state where these raffles are legal. The state law defines “net proceeds” as “the gross receipts … less reasonable sums expended for prizes, local license fees and other reasonable operating expenses incurred as a result of operating a raffle.” The complete law falls under The Raffles Act.

One of the largest web sites listing homes for sale via raffle is USA Home Raffle, which brings homeowners into contact with non-profit organizations in their area. Another web site raffling Illinois homes is House of Dreams.

What do you think? Would you consider raffling your home if it has been on the market for several months and has not found a buyer? It does seem to have that “you may already be a winner”-feel to it, but who wouldn’t put up $50-$100 for the chance at a home worth $200,000?