You might have noticed over the past couple of years adverts for properties raffled off by their owners popping up all over social media.
The homes look enticing and, if you are struggling to buy your own property, the price of a ticket seems like a gamble worth taking.
To a homeowner struggling to sell on the property market, or who is facing a personal financial crisis and is looking for a way to quickly clear their mortgage, raffling off their home looks like a perfect solution.
But to other people, raffles look like another shameless internet scam designed to empty your wallet–too good to be true.
So what is the truth? Are property raffles worth it for either side? And are they even legal?
Raffle tickets can be on the pricey side, often several times the cost of a scratch card, which have prizes of a similar and even greater value on offer than the homes.
Property raffles are also like any other lottery. Critics of gambling regard lotteries as a mug’s game because the odds of winning are so tiny. You’re all but certain to lose.
There are also conditions attached that aren’t always clear. Homeowners will need to sell a certain amount of tickets to make the raffle worthwhile.
So they stipulate that you can only win once a specific number of tickets are sold.
As a result, many of these raffles do not end up going ahead as planned because the ticket sales threshold is not reached.
From the homeowner’s perspective, the raffle holder could end up losing a substantial amount of money spent on advertising the lottery across the internet.
The only way a raffle could realistically succeed is through advertising and social media marketing.
One controversial raffle for a luxurious £3m ($3.9m) home in Ringwood, Hampshire, left entrants angry after not enough of the £25 tickets were sold — so nobody won the property.
Instead, as per the raffle’s terms, the owners kept a portion of the revenue, covered their costs, and gave the leftover cash of around £110,000 to the winner.
But the biggest problem of all is that the raffles tread a very narrow legal line.
Gambling is a regulated activity and there are strict rules about what you can and can’t do.
According to the Gambling Commission, which regulates the industry, lotteries can only be run for the benefit of a good cause, such as charities. They cannot be commercial or for profit.
“Charities and other non-commercial organisations who run lotteries rely heavily on the income they receive from lotteries to support the important work they do,” the commission states.
Simple raffles work in practice like lotteries and therefore would be subject to the rules. You may even need a licence to do it.
However, free draws and prize competitions are not subject to the same rules. Both can be done for commercial gain.
In free draws, participants do not pay an entry fee.
With prize competitions, participation cannot rely on chance and needs to require an element of skill, knowledge or judgment.
So these are, in reality, the only means of “raffling” off your property.
Raffle tickets are often sold to those who correctly answer a question, bringing the competition in line with gambling rules as a prize competition. But if you bought a ticket in a property raffle that was later deemed illegal, you definitely wouldn’t win any prizes and you might also lose the money you paid for a ticket.
If you are considering raffling off your property, make sure you do it in consultation with gambling regulators.
You’re probably best of sticking with an estate agent, though.