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Unread 09-11-2008, 01:15 AM
 
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Default Selling Home by Lottery

Does anyone know anything about selling a home by selling lottery tickets? I heard of a guy who just sold 1500 tickets for $100 each, making $150,000 on his home before closing costs, etc. Is this legal? Maybe in some states? What are the chances of selling that many tickets? I'd like to try it with our home in Montana but not sure if it would work. Have any of you heard or it or tried it yourself? I know that if you don't sell all 1500 tickets then you reimburse the people who bought tickets. Any info is appreciated!
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Unread 09-11-2008, 06:21 AM
 
Location: San Antonio
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Risky and probably not legal in your state. Talk to your real estate attorney. In theory, it sounds like a great idea, but if it were so easy and legal, everyone would do it.
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Unread 09-11-2008, 07:51 AM
 
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Montana is particular on lotteries. Check with the lottery rules in that state.

Couple things to think about:
1. The winner will have to pay income tax on the new home. That gets expensive!

2. here are the Montana rules on a raffle:
23-5-413. Raffle prizes -- permits -- exceptions. (1) (a) Except as provided in subsections (1)(b) and (1)(c), a permit must be issued by the board of county commissioners for each raffle conducted within its jurisdiction. The permit must be issued before the raffle may be conducted.
(b) If tickets for a raffle are to be sold in more than one county, a permit must be obtained only in the county where the winners of the raffle are to be determined.
(c) If a raffle is to be conducted by a religious corporation sole or a nonprofit organization, as defined in 23-5-112, a county permit is not required.
(2) Except for a religious corporation sole or a nonprofit organization, a person or organization conducting a raffle shall own all prizes to be awarded as part of the raffle before the sale of any tickets.
(3) A person who has conducted a raffle must submit an accounting to the board of county commissioners within 30 days following the completion of the raffle.
(4) The sale of raffle tickets authorized by this part is restricted to events and participants within the geographic confines of the state.
(5) The value of a prize awarded for an individual ticket for a raffle conducted by a person or an organization, other than a religious corporation sole or a nonprofit organization, may not exceed $5,000. The prize may be in the form of cash, other intangible personal property, tangible personal property, or real property. Prizes may not be combined in any manner to increase the ultimate value of the prize awarded for each ticket.
(6) (a) A religious corporation sole or a nonprofit organization shall comply with the requirements in subsections (3) and (4).
(b) The proceeds from the sale of tickets for a raffle conducted by a religious corporation sole or a nonprofit organization may be used only for charitable purposes or to pay for prizes. Proceeds may not be used for the administrative cost of conducting the raffle.
(c) (i) The value of a prize awarded for an individual ticket for a raffle conducted by a religious corporation sole or a nonprofit organization may equal or exceed $5,000 if the prize is in the form of:
(A) tangible personal property; or
(B) real property the fair market value of which has been certified in writing by an appraiser licensed under 37-54-201.
(ii) If the value of the prize is less than $5,000, the prize may be in the form of cash, other intangible personal property, tangible personal property, or real property.

So the quick answer is you can't do it unless you are a nonprofit org in Montana. You could try to run the raffle somewhere else but since the house is located in Montana it'd get sticky.
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Unread 09-11-2008, 10:04 AM
 
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Sounds like way too much work & hassle! I was just wondering how this guy did it that I read about. Maybe he didn't even run it legally? Just hope someone comes along to buy my house
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Unread 09-11-2008, 10:13 AM
 
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Quote:
Originally Posted by GEORGIAINMT View Post
Sounds like way too much work & hassle! I was just wondering how this guy did it that I read about. Maybe he didn't even run it legally? Just hope someone comes along to buy my house
He probably did it illegally or it's an old fish story. I know a lot of fish stories. To me, trying to sell 1500 lottery tickets would seem like a lot of work. The other thing is the taxes - if you win $150,000 your taxable income is $150,000 plus whatever you make. It throws you into the highest tax bracket so you end up paying around $45,000 in income taxes on your free house. If you can't afford to buy a house normally you certainly can't afford to pay the taxes. I suppose you could try to get a HELOC on the home just after you move in (assuming you can defer taxes a few weeks) but then you are stuck with a mortgage payment anyway....

Down in Arizona they have an annual health and wealth raffle where they raffled off a few new homes. The problem is the homes were like $750,000 so the new owners got stuck with $200,000 in taxes. Then the house value plummeted to $400,000 or $500,000 so it was really a crummy deal all around. They got around the rules because the raffle was for a non-profit org.
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Unread 09-11-2008, 10:36 AM
 
Location: Virginia Beach, VA
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Quote:
Originally Posted by bigtrees View Post

Down in Arizona they have an annual health and wealth raffle where they raffled off a few new homes. The problem is the homes were like $750,000 so the new owners got stuck with $200,000 in taxes. Then the house value plummeted to $400,000 or $500,000 so it was really a crummy deal all around. They got around the rules because the raffle was for a non-profit org.
How is getting a 1/2 million dollar house for 200k a crummy deal? even if you have to mortg it for 200k, your mortg payment will be very low!!! Come on big, aren't you the one trying to buy a house for more than 50% below market value? : )
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Unread 09-11-2008, 10:43 AM
 
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Quote:
Originally Posted by shellytc View Post
How is getting a 1/2 million dollar house for 200k a crummy deal? even if you have to mortg it for 200k, your mortg payment will be very low!!! Come on big, aren't you the one trying to buy a house for more than 50% below market value? : )
Yes, I am the one that is trying to steal a house on the market right now.

Getting a 500k house for 200k isn't a bad deal IF:
- You like the house and location
- You can actually afford a 200k mortgage
- You have bank lined up that will fund the mortgage
- You can afford taxes, property insurance, and maintenance costs on the home.

If you can't do all of these, then it's a crummy deal unless you can sell quickly to pay the taxes.

Have you seen Extreme Makeover, the TV show where they take someones normal house and turn it into a mansion? The bummer is many of the people can't afford to live in their homes that the show built for them and they are forced to sell it a few years later.
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Unread 09-11-2008, 10:56 AM
 
Location: Virginia Beach, VA
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Well, I wouldn't have paid $150 for a ticket if I a) didn't like the house and location; b) couldn't afford to pay for the taxes, property taxes, maint etc either with a 200k mortg or not.

Shelly
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Unread 09-11-2008, 11:03 AM
 
1,305 posts, read 528,070 times
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Quote:
Originally Posted by shellytc View Post
Well, I wouldn't have paid $150 for a ticket if I a) didn't like the house and location; b) couldn't afford to pay for the taxes, property taxes, maint etc either with a 200k mortg or not.

Shelly
Oh, I should have probably explained a bit more. The health and wealth raffle in Arizona was a huge raffle where they raffle off thousands of prizes, anywhere from trips to vehicles to digital cameras to new homes. (This was a few years back during the housing boom). It's not like the new home was the only prize, so a person might buy a ticket hoping to win something. So my line of thinking was people thought they'd get a free new home, get excited when they win, and then discover they have to pay $200,000 or $300,000 in taxes.

Anyways, those are all just my ramblings in response to the OP question. I've seen it done but always with for a nonprofit org.
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Unread 09-11-2008, 01:04 PM
 
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Default House Auction Article.

A little off the subject, but yesterday in the Billings, Montana paper there was a big article about a well known and respected builder there who had a big house auction. He had around 15-20 houses that he auctioned to the highest bidders. People ended up getting houses for half the price they were listed for. This way the builder at least got his money out of the houses and got them moved. These were in very desireable neighborhoods. Houses went for anywhere from $150Kish to in the $400K's I think. It was an interesting article. See it at billingsgazette.com. It gives a link there to the addresses, sq. footage, asking price & the price the houses went for. Pretty cool for those who got good deals on some very nice homes!
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