Will You Be Running a Raffle in 2011-12?  If so, check out the e-book from Sandra Sims and Jim Berigan.  Raffle Secrets is 50 pages long and comes with three free bonus e-books. Excellent content from authors you’ve known and trusted for years!

 

I field questions about raffle fundraisers quite often.  Especially since the downturn in the economy and housing crisis, I have heard from several people who want to raffle their own house.  It won’t sell on the real estate market so why not raffle it?

The first reason not to do a house raffle, is that in most cases a raffle must benefit a charity.  So the first hurdle is that you have to either be willing to donate your house to a charity that actually wants it, or is willing to buy it from you.  Neither option is probably appealing or easy.

The laws governing raffles and any “game of chance” very by state, and sometimes by county or city.  In other words, first look up the state laws, (if you live in the US) then contact your local government to see if there are additional restrictions before proceeding with any raffle, house or otherwise.

Unfortunately the legalities around raffles can have life altering consequences if not followed. Penelope and Joe VanDevelder of Waterford, Michigan decided to raffle their own home after a disappointing two years on the market.

Their plan was even featured on major news outlets, including MSNBC online and national morning television shows.  Then once authorities found out about the raffle, the couple had to shut it down and refund all of the tickets.

I truly feel compassionate for people who are going through this tough real estate climate.  With perseverance and a bit of luck, the VanDevelders and those in similar situations will find other options to avoid financial crisis.

dream house raffleWhile it’s unusual, there are charities who do house raffles with great success.  One major difference however is the type of house being offered.  Houses that are great prizes are not generally potential foreclosure situations.  In fact the houses that are offered as prizes are more like mansions.

There’s a “Dream Home” raffle going on right now in California for a $2 Million dollar home that overlooks San Francisco Bay.  The proceeds from the raffle will benefit Community Action Marin a private non-profit social service agency that helps the poor and disadvantaged people in Marin County. This amazing house raffle could be a dream come true for the prize recipient.  Like any prize of that size the taxes that the winner would have to pay could be astronomical.  Like the winners of the HGTV Dream House Sweeps, they would likely sell the house, pay the taxes and keep the cash left over.  Which would still be a a wonderful prize!

So could your non-profit offer such an amazing prize for your next raffle?  If you’d like to have a house raffle, or other big prize like a car or big-time cash prize, it will take a lot of work to make it profitable.  The Marin County house raffle, like other house raffles that I’ve seen, has corporate sponsors to underwrite the costs.  Publicity, advertising and perhaps direct mail or in person sales would also be required to sell the number of tickets needed to make the fundraisers worthwhile.

And after all that’s been said about legal issues, a fundraiser with a prize that size would need to be reviewed by an attorney experienced in such cases.   Insurance may also be another issue that you’d need to consider.

For charities who have the ability to plan and execute a fundraiser of that scope, a house raffle could be a viable way to raise money.  But for home owners who would like to sell their home, in 99% of cases, a house raffle is just not an option.

Share and Enjoy:
  • Facebook
  • Twitter
  • Google Bookmarks
  • LinkedIn
  • StumbleUpon
  • del.icio.us
  • Posterous
  • Digg
  • email

Posted on 19 November 2008

Related posts


Subscribe to our monthly newsletter or RSS Feed.



23 Comments For This Post

  1. C. Tyree Powell says:

    We agree. Although home raffles have been happening for over ten years, most American homeowners, as well as Non Profit Organizations (NPO’s), do not know much about the process or possibilities. This is exactly why, up to this point, we have seen some home raffles fail (for a variety of reasons).

    As with any new endeavor, we highly suggest you complete adequate due diligence in finding out if home raffles are legal in your state and all that it will take to embark on such an exciting fundraiser.

    The million dollar “Dream Home Raffles” are great. A lucky family can really win a fabulous home. But just as stated, most Americans will not be able to afford those homes, even after winning it as a prize.

    What about raffling average types of US homes? By this, I mean those that are in the $75,000 to $300,000 range. These are the homes that are at the center of the current economic situation in our country. These are also homes that if won for $100, an average American family is better able to keep for themselves and live the American dream of real estate ownership.

    Just think, on average, only about 5000 tickets would need to be sold for homes in this range. Apartment complexes could be targeted, churches, even college campuses. We think that, it is on this level that home raffles can have a major impact on local economies.

    Helping NPO’s make an impact on their local communities’ economies, and ultimately helping the entire US economy through home raffles is the main goal of USAHomeRaffle.com.

  2. Crystal | House Raffle Secrets says:

    Not only is it expensive to hold a house raffle for all the reasons you listed (publicity, advertising, direct mail), it’s expensive to cancel one.

    House raffle hosts that promise to return ticket proceeds face even more expenses if the raffle is canceled. Postage + envelopes can be almost 50c, so returning 2,000 tickets could cost around $1,000. That’s not including cost of labor, the checks, etc. It appears house raffles that return the proceeds usually retain 1% of the ticket price, and I imagine they’ll need it. More at House Raffle Expenses: About That 1% Processing Fee…

  3. Sandra Sims says:

    Thanks for the comments; these are all great points. It just shows how important it is to do all the research before jumping in to such a big project like a house raffle, especially one with so many legal ramifications. Great point Crystal that returning the ticket proceeds might sound like a good back-up plan but it can be a quite difficult in reality.

  4. Penelope VanDevelder says:

    Dear Sandra, After just reading your story, I feel deeply sadden, and the need to make this comment. My husband and I just didn’t jump into this project, we hired a lawyer to do all the research, attend the closing, draft the raffle ticket edit our website, for the raffle of our home. The actual facts are, our lawyer, put us in this mess and isn’t here to help us out of this horrible nightmare. We were left with immense public humiliation and embarrassment, not to mention anxiety, tears and depression. Oh did I mention the significant financial damages, We will get through this , and we will still have our home. All we wanted to do is move up north and get old together. Sometimes their can be a happy ending… were still waiting. Penelope VanDevelder (raffle home in Waterford Michigan)

  5. Sandra Sims says:

    Hi Penelope, thank you for responding to this story. I certainly did not intend to add to your anxiety, but to just serve as a forewarning for others wanting to do such a raffle. Sometimes all the planning and research can still not be enough. It is unfortunate what you have been through. I wish you all the best in working this out, as in the long run it will. Hang in there.

  6. Pat says:

    Raffles can only do good in this economy. I am working with the legislators to approve a bill to legalize real estate raffles where I live. I insist that either the donor OR the NPO be represented by a liscensed real estate agent as in any real estate transaction in our state. Th NPO does NOT have to own the property up front. Just like in car raffles, they pay for the property with the proceeds. Due diligence is nec. to see if the risk of investing 2-3k to get it off the ground, is worth it. I do believe not one but many houses would sell this way. Let’s look at the “stimulus” this would give a local economy.
    You have someone who owns a home for $400.00 +/-. Now they have money to either send kids to parochial school (saving tax payers $) , buy a car, go out to dinner more often, go shoppping. Hire a house cleaning service, etc etc etc. Or all of the above. It’s a win win situation. The main stipulation is that, as with all raffles in our state, it must be run through a NPO. Which also good because they are the first things dropped in everyone’s budget at crunch time. Now they (NPO’s) don’t have to nickel and dime everyone they see leaving the grocerie store, or after mass.. basically peddling to get some financial help. How do I know this ? I run charity auctions (as a volunteer) AND I am real estate developer.(seems like another volunteer position lately) Not a place to be in these times.
    WE need to think out of the box and quickly.

  7. Sheryl says:

    I’d like to find a NPO to raffle our resort – at least it comes with an income. No worries about coming up with the tax money for the prise winner. I’m just not finding a charity that could do this for us. Any suggestions??

  8. Sandra Sims says:

    Sheryl, Raffling a business would have some added challenges. Even though it has an income, as you know well, it is not passive income. Whoever won the raffle would want to have a business not just a home. There is a lot of liability with large prize raffles, from a legal standpoint, the amount of tickets that need to be sold, and in the end it has to be a viable fundraiser strategy for the organization. You might contact some of the larger charities in your state. But be sure to have all of your homework done first, including a professional valuation on the business and property itself, and a case for why it would be beneficial to the charity. I would recommend going to your local Small Business Development center to see if they could help. http://www.sba.gov

  9. Tom says:

    I would love to hear from an attorney that represented a non profit and was successful in their house raffle.

  10. Will Stock says:

    We got around all the legal hassles — we’re in Spain and operate in the UK, where similar restrictions abound — simply by selling hotel vouchers instead of raffle tickets. Everybody wins in that 1) we get our price for the ten holiday properties we’re raffling, 2) ten winners get a piece of $7 million in houses and studios with some of the Med’s best views, 3) a worthy charity gets a windfall, on our case the Campaign Against Malaria, and 4) the absolute best thing for people who take part is that they can stay in our hotels and get their money back, or sell their hotel vouchers after the raffles if they can’t stay with us. Oh yes, one person in 3,333 will win a house or studio.

  11. Marianne says:

    Four years ago we purchased a country lane with six houses and a studio.Total rents for the year average $94,000.00.The property is located in Santa Rosa, California. We purchased the property for $1,100,000.00 and have added about $200,000.00 in improvements and repairs. Our labor (we did most of the work) amounts to about another $100,000.00. In addition to recouping our initial costs we would like to give $100,000.00 to a charity, add in the costs of doing the raffle and if possible the taxes that would be imnposed on the prize.I figure that this would be approximately $2,200,000.00. I would like to have a lawyer an account and some one who would be able to set up an internet sight for this purpose. Am I being realistic. I have no idea about how to do this process. do you have any suggestions:

    Thank you,

    Marianne

  12. Riana says:

    Pat and Will Stock will you please email me ..I would love to chat about what you have done and see how it can work with I am doing ..My email is berkana7@gmail.com

  13. Win a House says:

    Hi Sandra,

    Thank you for raising some very interesting points, in particular some of the issues surrounding the involvement of non-profit organisations and the desirability of the property prize. As Will highlights in his post, UK law draws a similar distinction between games of chance and prize competitions as many US states.

    In 2008/09, a number of UK homeowners appeared to rush into organising house competitions on the back of one particularly successful Devon property contest, which attracted some 46,000 entries and closed two months early. Unfortunately, just like the Oldborough Retreat Devon competition, many were halted due to concerns expressed by the UK’s Gambling Commission as to their legality.

    We feature a range of house raffles and competitions on our site; offering players the chance of winning properties across different countries. Most house competitions launched recently in the UK have tended to be structured as skill-based prize competitions (such as Spot the Ball competitions, Sudoku contests and quizzes). However, we continue to see pure house raffles launched in other countries despite seemingly being run for profit.

    The mechanism Will describes, which involves players buying a voucher for some sort of service (ranging from hotel accommodation to a restaurant meal) tends to be associated predominantly with Spanish house competitions.

    Although house raffles may not suit everyone, depending on your contry or state they can be structured differently to satisfy legal requirements while remaining attractive to players. At present, the challenge of selling enough tickets in time, together with that of working with a reliable payment provider online; appear to be the two most common obstacles faced by competition organisers in Europe.

  14. Citizen Activist says:

    The USA does not permit anyone, charity or individual, to conduct games of chance (raffles included) on the internet. Just because you see others breaking the law does not mean it’s legal. If you get caught, it’s a felony and prison for you. Still want to take that chance?

  15. Chantel says:

    Just curious where does it say that in the USA it is ilegal to use the internet to raffles houses? You can buy horse racing tickets through the internet also I’ve noticed that there are many npos with house raffles on the net. How can this be?

  16. Peace says:

    I agree with you Chantel, to my knowledge there is no law prohibiting using the internet to raffle houses in the USA. Non-profits do it all the time so I’d be very surprised there is any such law. As long as you can legally run a raffle to my knowledge you can do it in various ways including the internet.

    I think it’s a great idea and if done correctly can really work out for both the homeowner and the nonprofit:
    http://winahouseraffles.com/blog/organizing-house-raffles/30-house-raffle-brings-charity-back-into-profit.html

  17. lewis watson says:

    hi can anyone tell me if you sell something and enter the buyer into a draw free, is this legal in the uk.

  18. Diane G. McDermott says:

    My book titled: I Sold My House in a Raffle – A Proven Step-by-Step method to Get Your Asking Price, Save Money, Save Time, and Help a Charity Too! will be availble in early 2010. Watch for it from Morgan James Publishing, U.S. I agree with prior comments that you must be prepared, it isn’t easy, and there are legal ramifications. However, I Sold My House in a Raffle walks the reader through the entire process. Although there are times when you should not do a house raffle, preparation is definately the key to success. Diane Giraudo McDermott

  19. Diane G. McDermott says:

    Hi,
    I questioned an internet attorney, referring to the Federal Wire Wager Act and he responded that Federal law does not prohibit the selling of raffle tickets online, but the issue is at the state level. For example, California has a penal code prohibiting the sale of raffle tickets on the Internet. I see that many California raffles are using fax and mail and prohibit Internet buys. So check your state laws regarding selling raffle tickets online.

    Regarding a successful outcome: Although the grand prize is very important, I believe it is not so much the house that affects the outcome but preparation by the nonprofit organization and the homeowner. A house raffle is like a horse race; you must leave the starting gate at full speed with a bang, reach a strong momentum and then wrap it up with another burst of energy. And before you even start selling tickets, lots of preparation is required.

    For the grand prize, a foreclosure home will work too as long as you have an agreement with the lender to delay the foreclosure process until after the drawing date. You’ll find foreclosure homes in a variety of price ranges. Bank owned foreclosure properties work too, but it can take months to iron out an agreement with the loss mitigation dept. of the bank.

    Diane Giraudo McDermott, Author of I Sold My House in a Raffle
    released on June 1, 2010 by Morgan James Publishing. Check it out at http://www.isoldmyhouseinaraffle.com

    House raffles are a win win for everyone, let’s keep them going!

  20. Gill C says:

    Interesting idea… Do you think it might be easier to sell cars this way otherwise? I’m thinking it’s a smaller prize and more standardized so more likely to appeal to a broader public? I’ve come across raffles and competitions featuring a car prize (e.g. http://win-cars.com/cars.html) but the question I have is whether this might work for 2nd hand cars as well, what are your thoughts (if the car is in good condition). Thank you, Gill

  21. Bruce says:

    You might want to know of an online raffle site, a corporation formed in a jurisdiction where online betting is legal by 2 non-profits and a provisional gov’t. http://www.tobet.me It works mainly on 50/50 donations sold through http://www.buyorsell.it (goods and services). The funds are then listed as a growing prize pool which can be allocated (focussed) to your charity or non-profit, or the player can apply them to others listed on the site.

    It is legal in most jurisdictions because there are no monies transacted, and the winning is based on (in most cases) correctly selecting the winning moment (races or other timeable events). Most of the usual regulations still apply (individuals can’t usually be the beneficiary, however the site aims to make funding possible for a variety of worthy international projects.)

  22. jason F. says:

    Does anybody know the logic or reasoning behind the law that makes it illegal to have a private entity hold a raffle and profit from its proceeds? And if you were to propose a bill to attempt to change the law, who would potentially, be your opposition.

  23. Diane Giraudo McDermott says:

    Hello Jason F.
    It is not illegal to profit from the proceeds of a house raffle. I.e. you get your home sold, and if you sell it for more than you have in it, you’ve made a profit. Say you purchased a home for $200,000, and ten years later you sell it through a raffle and you get the appraised value of $300,000; you’ve made a profit of $100,000. (raffle laws vary by state). I personally think it is good that individuals cannot run raffles and that qualified organizations such as a nonprofit, church, or school, (in most states) can. The opening for fraud is too great, and it would be difficult to police. I believe there would be too many instances where tickets are sold, but the ticket seller takes off with the cash without holding a drawing, or the ticket seller does not own the grand prize in order to award it to the winner.

    To your success,
    Diane Giraudo McDermott
    author of: I SOLD MY HOUSE IN A RAFFLE, a proven step-by-step method to get your asking price, save money, save time, and help a charity too.


Leave a Comment

Please keep comments related to this subject of this article. If you have a general comment you may use our guestbook instead or to contact us directly and get a response by email, please use our contact form. By using the form below your comments (but not your email address) will be displayed publicly. Please follow our comments policy or your message will be deleted (no advertisements.)