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How does raffling a house work?

What is a house raffle?

A house raffle is a competition where participants can purchase tickets for a chance to win a house as the top prize. The homeowner or a third party company organizes the raffle to sell the house without having to list it on the traditional real estate market. Instead of paying the full market price, participants buy raffle tickets for a fraction of the home’s value.

Raffling a house has become an increasingly popular way for homeowners to sell their properties over the last decade. It allows sellers to monetize the equity in their homes in a quicker, more efficient manner than a traditional sale. Raffles also create excitement and interest among potential buyers.

How do house raffles work?

House raffles work by gathering interested participants who purchase raffle tickets for a chance to win the home. The raffle organizer sets a total ticket number and price point per ticket to cover the market value of the home, along with any additional overhead costs. For example, a $500,000 home might sell 5,000 raffle tickets at $100 each to raise $500,000.

Once all the raffle tickets are sold, a random drawing selects the winning ticket. Some house raffles incorporate multiple prizes beyond just the grand prize house. Lower-tiered prizes like gift cards, vacations, or cash payouts give participants who don’t win the house still a chance to win something.

Typical steps for organizing and executing a house raffle include:

Selecting and pricing the home

The raffle organizer works with the homeowner to have the property professionally appraised. Appraising establishes current market value and also verifies the home is free of any clouds on the title. Any equity beyond mortgages or liens can be included in the total raffle valuation.

Factors like location, size, age, and condition impact the appraised price, which then determines the total number of raffle tickets available at a set price point per ticket. Popular raffle homes tend to be in desirable areas and priced affordably compared to local real estate.

Announcing and marketing the raffle

Once established, the house raffle is announced and promoted to drive ticket sales. This involves advertising across platforms like social media, email, and the raffle organizer’s website. The home is highlighted through professional photography and videos so participants can view the prize.

Marketing activities continue regularly until the ticket sales deadline to keep interest and momentum going. Some raffles even allow online ticket purchases to make participating easier.

Selling raffle tickets

Raffle tickets are sold during the announced entry period, which can last weeks or months depending on sales goals and demand. Tickets may be available for purchase through online platforms or in-person during scheduled open houses where participants can tour the home.

Non-profit organizations sometimes re-sell tickets as fundraisers. To incentivize sales, popular raffles often award prizes for top ticket sellers.

Selecting a winner

Once the ticket sales period closes, the raffle organizer conducts a random drawing to choose the winner and any lower-tiered prize winners. Common selection methods include pulling numbered ping pong balls from a lottery spin machine or using a computerized random number generator.

For transparency, the drawing is usually conducted publicly and the results broadcast live online. Independent auditors are sometimes used to verify and officiate the process.

Transferring ownership

After the winner is selected and verified, ownership officially transfers. The title company handling the raffle will facilitate closing just as they would a traditional home sale. The winner becomes responsible for all future expenses like taxes, insurance, utilities, and maintenance costs, just like a typical homebuyer.

Any closing fees or mortgage payoffs are deducted from the overall raffle proceeds when distributing the cash portion to the homeowner. However, the winner is not obligated to take on any existing mortgages.

What are the steps for entering a house raffle?

Entering a house raffle as a participant is straightforward. Common steps include:

Finding available raffles

New house raffles are regularly announced online and in local media. Listing sites like allow for browsing upcoming and active raffles by location. Signing up for company email newsletters also keeps interested participants in the loop on available raffles.

Researching the home and raffle details

Once an appealing raffle is identified, review all provided details like property photographs, home specs, location, ticket prices, and sales timelines. Also research the raffle company organizing the competition for legitimacy.

Purchasing tickets

Raffle tickets are purchased online, in person, or over the phone during the entry period. Multiple tickets can usually be purchased to increase odds of winning. Friends, family members or co-workers may team up to buy tickets together too.

Awaiting selection day

After buying tickets, participants anxiously await the raffle drawing to see if they hold the lucky winning ticket! Monitoring the raffle company’s website and social media accounts provides updates on the competition status and pending drawing day.

Claiming the prize

Following the raffle drawing, the winner is notified and prize claims initiated. Lower-tiered prize winners can redeem directly with the raffle company. For the grand prize house, the title transfer process with attorneys begins.

Participants who don’t win still got the excitement of entering, while charities benefitted from any ticket proceeds allocated to them. With potential to win big for a small investment, entering a house raffle pays off either way!

Are house raffles legal?

The legality of house raffles depends on state laws where the home is located. In many states, house raffle legality falls into a gray area due to ambiguous gaming and gambling statutes. However, a number of states have laws which explicitly permit or prohibit home raffle contests.

States where house raffles are legal with some regulations include:

State Key Regulations
California Must register with State Attorney General’s office
Colorado Limited to two raffles per year
Florida Only certain non-profits may conduct

A few states with an outright ban on for-profit house raffles include:

New York

However, over 30 states currently have no specific house raffle laws. Raffles are assume legal unless proven otherwise. Organizers should still consult local attorneys to ensure compliance with any other applicable state gaming statutes.

The rise in popularity of house raffles has seen increasing government scrutiny and regulation attempts to protect participants. But many states remain open to raffles as a novel way to sell real estate.

What are the tax implications of winning a house raffle?

Winning a brand new house through a raffle competition seems like a dream come true! But along with the windfall prize comes tax obligations to consider.

In the eyes of the IRS, a house won through raffle is classified as “gambling winnings” and therefore considered taxable income. This means state and federal taxes must be paid on the fair market value of the home, even though the winner didn’t actually pay full price to obtain the house.

Let’s break down key tax implications:

Federal taxes

For federal tax purposes, the entire value of the home is subject to income tax at the winner’s ordinary income tax rate. This can be as high as 37% depending on income level and filing status.

If the home is worth $500,000, the winner could owe around $150,000 in federal tax if in the 35% bracket. Taxes owed are due that same year at tax filing time.

State taxes

State income taxes also apply in most states. The state rate is multiplied by the home value and added to federal tax burden. For example, a 5% state rate would add $25,000 in state tax.

Property taxes

Beyond income tax, winners become responsible for ongoing property taxes just like any homeowner. This yearly tax averages 1-2% of the home value.

Property taxes and insurance generally get escrowed into monthly mortgage payments. But raffle winners often need to pay these large bills upfront at close.

Reducing taxes

A few options exist to reduce raffle house tax obligations:

– File taxes jointly with spouse to reach lower bracket levels
– Claim itemized deductions to help offset the winnings
– Pay off mortgages to reduce appraised home value
– Sell or rent the home to generate offsetting losses

Winners may also negotiate with the raffle sponsor to withhold taxes from the raffle proceeds. But ultimately, taxes will be owed based on the total retail value of the prize house.

Are house raffles risky? What are some concerns?

House raffles offer the alluring chance to win a fabulous new home for just a few hundred dollars and the click of a mouse. But participating in a raffle competition also carries some areas of concern:


Some raffle companies are outright fraudulent, collecting entry fees but never awarding a home. Participants should thoroughly research organizers and ensure proper registration and licensing with state authorities. Requiring raffle proceeds be held in escrow provides additional protection.

Condition of home

While listings include photos, a raffle home’s actual condition may be misrepresented or hidden from remote buyers. Visiting open houses can help gauge quality and identify any issues. Hiring a home inspector before claiming the prize adds protection.


Entry is usually open country-wide, so winners may end up with a home far from their current location. Out-of-state winners could end up responsible for ongoing costs like property management, taxes, insurance and maintenance from a distance.


Beyond purchase price, ownership costs like taxes, insurance, utilities and maintenance can prove expensive. Large upfront tax bills also strain finances. Winners need to carefully assess total costs before accepting the house.


Winners forced to quickly resell due to high ownership costs or distant location often lose money. The local market may not sustain sales prices nearly as high as the national raffle valuation. And profits get further reduced by fees like realtor commissions when reselling.

Pros and cons of raffling your own home

Homeowners considering raffling their own house often weigh various advantages and drawbacks:


  • Higher valuations – Raffles tap into national demand, not just local markets
  • Faster process – Raffles take weeks/months versus traditional sales taking several months
  • Unique approach – Creates interest and buzz versus just another listing
  • No showings – Raffles don’t require constant open houses and tours
  • Close as-is – Sellers avoid extensive repairs or staging
  • No contingencies – Raffle terms are cash sale as-is


  • Upfront costs – Paying for appraisal, marketing, legal fees
  • Less control – Relying on third party raffle company
  • Risks – No guarantee enough tickets will sell to transfer title
  • Taxes – Raffle income may be taxed higher than sale profits
  • Anonymity lost – Identity publicized as raffle subject

Homeowners must carefully weigh pros and cons against their individual motivations for selling. Those needing a quick sale or maximum price may benefit most from raffling. But sellers wanting more control and certainty may prefer listing traditionally.

How are house raffles regulated in the United States?

Regulation of house raffle contests in the U.S. occurs at both state and federal levels. However, oversight remains fragmented:

State oversight

Most raffle governance happens at the state level, but approaches vary widely:

– 5 states prohibit house raffles outright
– 15+ states allow raffles with consumer protection laws
– 20+ states have no house raffle laws currently

Areas regulated include registration procedures, ticket sales, advertising disclosures, and bonding requirements. States restrict eligibility to non-profits or require using licensed third-party raffle coordinators.

Enforcement falls to State Attorneys General, Secretaries of State, or gaming commissions depending on local statutes. Fines, loss of licensing, or blocked ticket sales are potential penalties for violations.

Federal oversight

On the federal level, the FTC monitors raffle competitions for false advertising and fraud under its consumer protection mission. The IRS also regulates raffle proceeds and taxes owed on winnings.

The FTC may involve other agencies like the FBI, US Postal Inspection Service or SEC where criminal activity is suspected. But most day-to-day compliance is left to disparate state authorities.

Calls for reform

With house raffles growing more popular, many advocate for more uniform national legislation. Potential federal reforms include:

– Passing an anti-fraud house raffle act
– Creating an online national raffle registry
– Requiring bonding or insurance to protect participants
– Limiting interstate raffle sales to approved states

However, earlier attempts at bills in Congress have stalled. For now, house raffle oversight remains decidedly varied state-by-state. Consumers are left to decipher legality and protections on their own for each contest entered.


Raffling houses has emerged as an inventive modern solution pairing real estate sales and sweepstakes excitement. This unique combination allows homeowners to monetize equity quickly, while offering the public a chance at an invaluable prize for just a small ticket purchase. But the opportunity also comes with significant taxes, costs, and potential risks for winners to consider.

State regulation also varies widely – from fully allowing house raffles to outright banning the practice. Interested participants should research rules in their state and carefully vet each raffle company before entering. With the proper diligence, house raffles can pay off with the experience of a lifetime!