Property Raffle: Is It A Good Way To Sell My House?
In this article we will be exploring if a property raffle is a good way to sell your house, if a house raffle is legal and what alternatives there are.
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Property Raffle: Is It A Good Way To Sell My House?
A property raffle or house competition, have taken social media by storm over the past ten years, with the chance of winning perfect houses for as little as £1 – or even free. For the homeowner, it can seem like a hassle-free, simple way to make more than the value of your house quickly.
But the reality is; that most house raffles always fail to sell enough tickets to make a profit on the property and gain on top of marketing, conveyancing and legal fees.
What Are Property Raffles?
A property raffle is a draw or chance to win a house which a person enters by purchasing a ticket for free, £2 or whatever you wish to set the ticket price at. The one lucky winner is selected randomly on a specified date and given the house as the prize.
It can seem very attractive to many, as most properties put up for raffles are expensive houses and well outside their regular budget.
If you get it wrong, involvement in a house raffle can be a slippery slope of legal problems.
Are Property Raffles Illegal?
Although property raffles are legal, they should be walked with caution as, in most cases, they are unsuccessful and may lead you to legal trouble.
A failed house raffle may mean that you cannot cover the cost of the marketing spend you spent trying to raise tickets, or even the increased amount doesn’t cover the cost of your house.
In some use cases, unsuccessful property raffles have meant the property owners had to put the house on the open market for below market value to pay off the original bidders’ raffle tickets.
What Are The Legal Guidelines For Property Raffles?
In the UK, if you want to carry out a property raffle and receive the profits for private gain, you must adhere to the Gambling Laws to avoid being penalised:
- Straight house raffles are illegal, so if you wanted to host a property raffle, you would need to add a ‘competition element’.
- Competition elements mean that not all participants will pass the initial test.
- The competition elements might mean that any participants would need to take part in a skills-based question or quiz before they can purchase a ticket or win the house.
- Any house raffle that does not include a competition element is classified as a lottery, and lotteries cannot be hosted for private gain or for selling property.
- According to the Gambling Commission, if you wish to reap the profits of the property raffle and instead donate the profits to charity, then you do not need to adhere to the competition element.
- You could also ensure that the raffle tickets were free and that there would be no monetary gain.
You will also need to be careful not to slip into the realm of money laundering and redress rules while marketing your house raffle.
As the Advertising Standards Agency (ASA) may constitute your house raffle as misleading advertising that goes against the Committee of Advertising Practice (CAP) code, and you will be reported to the National Trading Standards Estate and Letting Agency Team (NTSELAT).
Do You Need A Licence For A House Raffle?
If you adhere to the UK Gambling Commission’s (UKGC) legal guidelines, you do not need a licence for a house raffle, as the Gambling Commission does not regulate prize competitions.
However, if you wish to carry out a property raffle and receive the profits for private gain while not adding a competition element, you must apply for a licence from the UKGC.
Is A Property Raffle A Good Way To Sell My House?
If your property raffle is successful, it may be a great way to gain a profit on your house, especially if you have been unable to sell it on the open market due to several reasons:
Because property raffles usually involve large, expensive, dream homes, which often take far longer to sell on the open market than average homes, raffles are a great way to sell your property in a fraction of the time.
Properties deemed problematic (structural issues, unusual or strange ownership history) on the open market can be quickly sold in a house raffle because people will only buy a raffle ticket at a fraction of the price they usually would — the risk for them is lessened.
If the market is slow or the economy is struggling, like during a recession, then a house raffle can be a great way to sell your home effortlessly as the risk is lessened for the ticket buyers.
Why Is A Property Raffle A Bad Way To Sell My House?
Although there may be benefits to selling a house via a raffle, there are many risks involved with this house-selling process:
Most house raffles end up being cut short, either because the UKGC has shut them down or because they need to sell more tickets sales required to cover the cost of the house, resulting in cash prizes being offered instead.
If you do not follow the legal guidelines, then you may be found to be violating the gambling and advertising legislation — even worse, this could happen before you manage to hit your target ticket sales figure.
If you are forced to offer a cash prize instead of the property, you will most likely have spent hundreds if not thousands of pounds on marketing your raffle, which may lead to you incurring significant losses and still having the unsold property.
If you are in this situation, we can buy your property in as little as 28 days, pay for all your fees associated with selling your property and handle everything for you.
You can expect to spend a lot of money on advertising and marketing when selling a house via a raffle. You will need to utilise social media marketing and property raffle sites (that advertise for a fee) to engage an audience of potential buyers — all of which costs money.
You will also need to ensure you have a legal professional or solicitor on hand to ensure that you are not breaking any of the Gambling Laws and to handle the completion stage of house selling.
A house raffle is exceptionally complicated and creates severe administrative work, from completing paperwork to following GDPR and protecting the entrant’s data. You will likely outsource this work to a third party which will also cost a significant amount.
How To Raffle A House
Most house raffles are undertaken privately by the homeowner; however, some raffle companies will advertise your home for a fee. If you want to raffle your house legally, you will need to follow these steps:
- Register your house raffle with the lottery duty and pay 12% of the proceeds from ticket sales.
- Hire a solicitor or conveyancer to write terms and conditions and ensure the property raffle is legally compliant.
- Set a scheduled deadline for your target ticket sales and the number of sales.
- Work out the number of tickets you need to sell to achieve your target. Ideally, it would help to plan for contingencies like a cash prize instead.
- Hold a raffle draw which can either be done over social media or a website.
- Once you have picked a winner of your house, you must instruct a solicitor to transfer the property ownership or give the cash prize if you do not reach your desired target.
Is A House Raffle A Good Way To Make Money?
If you want to host a property raffle, it is quite an attractive way to make money. But, we warn you to be cautious as not only is a property raffle legally problematic, but it is also not the easiest way to sell your house.
If you sell with us, you will benefit from a hassle-free process, with all your solicitor fees paid on your behalf. We can sell your property in as little as 28 days, and you won’t have to worry about marketing costs — we’ll cover those too!
Can You Win A House At Raffle?
According to the house raffle platform, Winmydreamhome.com, only 19% of property raffles end up with a house being awarded to a winner. That means that not even a fifth of all raffles are successful.
Omaze is the best-known UK-based house raffle company that offers homeowners a website to advertise their properties for a fee.
The company claims that someone will always win the house, but if the owner does not sell the right amount of tickets, no one will win the house, and the winning ticket holder will be given a cash prize or fixed sum instead.
Why Can Raffles Create A Nightmare For The Winner?
Although a property raffle may go viral on social media and create quite a stir for you, as people become closer to winning their dream home, winning a large and expensive home may become a nightmare for the winner.
The winner may not be from an affluent background and therefore be unable to keep up with the costs of maintaining and repairing their new home, let alone pay the stamp duty on the property.
Should You Do A Property Raffle Or Use A Modern Estate Agent?
House raffles can be a precarious way to sell expensive or unusual houses, even if they occasionally end in high rewards.
If you do not want to risk your property in such a high-risk scenario, why not sell with us?
The Property Selling Company is a modern estate agency which prides itself on ensuring a house sale is fast, effortless and free. We offer you a complete online estate agent service without the fees – our mission is to change how you sell houses.
We will work alongside you every step of the house-selling process, handling everything so you won’t have to. The days of expensive solicitor fees and legal work are over, and our team of property experts will continue to be there even after the process is complete.
We will market your property on popular property portals such as Rightmove and Zoopla, organise viewings, cover legal fees, and negotiate better deals, all for free!
If you are ready to sell your home in 28 days, get in touch today and fill out one of our fast, free, no-obligation forms for your house valuation today!