Real Estate’s Latest Game of Chance
posted by Kaimipono D. Wenger
Today’s NYT contains an article titled “Real Estate’s Latest Game of Chance.” No, it’s not about the bailout. But it could be. The article discusses the rise of raffles as a real estate sales device for property in a falling market:
Two years ago, Ms. Crawford and her husband, Dennis Kelly, moved from their log house in Hancock, Md., to a renovated 1929 farmhouse nearby, which they bought for $375,000. They put their old house, which they owned outright, on the market, planning to pay for the new one with proceeds from the sale. But the real estate market cooled, and the house sat unsold. Two months after the move, saddled with a costly mortgage, the couple reluctantly put their new farmhouse up for sale; after more than a year, it didn’t find a buyer, either. “Soon it was going to go into foreclosure,” said Ms. Crawford, a 60-year-old elementary school teacher, a hint of the panic of that time creeping into her voice.
Desperate, Ms. Crawford came up with a novel strategy: she would hold a raffle. Tickets would go for $100 each, and one lucky person would win the farmhouse. If they could sell enough tickets, they could walk away debt-free.
Last December, the couple teamed with a real estate agent and a local charity and set about publicizing the raffle, posting flyers and calling news outlets. By the time the drawing was held at a local country club this past March, they had sold almost 6,500 tickets, raising enough money to cover the cost of the house along with a surplus of more than $200,000 that went to the charity. Having already moved back to the log house, they counted themselves lucky to still have a place to live.
Now, I’m sure our lawmakers are duly considering all options. But let’s look at the picture, here. We have hard-to-value assets, a skeptical market, dropping prices. This is exactly what the Crawford-Kellys faced. Maybe it’s time for the Fed to skip the market altogether, like the Crawford-Kellys did. Maybe it’s time for . . . bailout raffle.
Line on up, folks. $100 per ticket. And one lucky winner will receive a splendid portfolio of troubled mortgage-backed securities (valued at . . . well, let’s just say it’s probably less than $700 billion). Now all we have to do is sell 7 billion tickets, and we’re good.
Of course, some folks might oppose gambling and games of chance in the market place. But as current news shows, opponents of gambling are really not running the show.
September 25, 2008 at 4:45 pm
Posted in: Current Events
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