Imagine yourself in this position: You are an aspiring homeowner – but getting onto the property ladder can be nothing short of maddening. Properties seem out of your financial reach, and you tell yourself to be content with letting your housing. To save up. To wait. To sacrifice. To dream. To hope. And to wait some more.
Or imagine yourself as a homeowner who wants to sell. You may have inherited or renovated a property, for example, and found yourself unable to pay the climbing and constant upkeep maintenance and mortgage. You need to get out from under this burden, and you need to do so as quickly as possible.
Is the answer to both scenarios a raffle?
A Look at House Raffles
What happens when you raffle a house? This is a non-traditional way to sell or buy, to be sure. In this situation, the public can purchase raffle tickets for a house that may otherwise be out of their price range. The tickets typically range from as low as £2 to £1000. The prize: A house!
As with an auction, when the “reserve is met” – that is, when enough raffle tickets are sold to cover the cost of the property – a ticket is drawn and the winner becomes the owner of the property for a scant fraction of its market value. This is the manner in which a £1 million estate in Devon was sold in 2009.
The owners of the estate sold 46,000 tickets at £25 each. Hopeful ticket holders were entered into the chance to win the Oldborough Mansion, situated on 11 acres and valued at £1 million. At this time, properties were being sold at bargain basement prices, and the owners wanted to compensate for the significant decrease in market value.
Sold it did, and the concept took off.
But is a raffle house competition really the solution it promises to be?
What Can Go Wrong?
Say you are a buyer and purchase a raffle house ticket for £2, £20, £200 or even £2000. If you win a property worth £200,000, £500,000 or even £1 million, this is a remarkable return on investment. And depending on your budget, if you are not the lucky winner… not a catastrophic loss.
The problem is that very few raffles make it to the point of completion. Ticket sales may be insufficient to cover the cost, and instead of a dream estate, winners may receive a low cash prize instead. In some instances, the cost of your ticket is simply refunded – in others, it disappears.
Since 2018, there have been a recorded 216 raffle competitions. Only 36 have progressed to a house giveaway. Betting your future on a 17% chance seems beyond risky.
The process is equally perilous for a seller. For example, the owners of a six-bedroom home valued at £725,000, encouraged by the sale of the Devon estate, chose to offer their property as the prize in a house raffle. However, after selling some tickets, the Gambling Commission stepped in to assess the legality, putting the process on hold.
The owners had used the initial ticket sale proceeds to finance the process. By the time the Gambling Commision gave the go-ahead, interest had dwindled. They did not sell enough tickets – and further, they’d spent the money from the initial ticket sales so could not refund holders. The owners faced severe backlash, including abusive emails and threats. They also had to agree to a contract that promised to repay holders when their house does sell.
Indeed, a great deal can, and does, go wrong.
Alternatives to a Raffle House Competition
Many homeowners are under pressure to sell quickly, and a raffle may seem like the logical choice. But, as we can learn from past cases, it does not always – or even usually – go to plan. A more reliable option is to work with a reputable cash buyer. They will purchase your home in its current condition, complete the valuation process expediently, offer you a final price quickly, and move to completion within a matter of days. Typically, you will receive between 80% and 85% of total market value. For owners like we mentioned above who lost money on ticket sales for a raffle that never materialised, this is a very attractive prospect.
Don’t risk your future on a gamble. Secure it with cash.