As published in Scotsman Guide's Residential Edition, February 2009.
Note: This article has been updated to events that occurred after our print publication went to press.
The focus of this month's Scotsman Guide is "creative financing" -- or alternative ways in which brokers can secure funding in a market where anything is impossible.
But in many cases in the past few months, brokers have been usurped in the creativity department by their homeowning clients.
Two of the most-prominent such homeowners have been Edgewater, Md.'s Tom and Dianne Walters. Beginning this past July, they've attracted international attention for their efforts to raffle off their home. As per Maryland law regarding such transactions, they partnered with local charity We Care and Friends, which is selling raffle tickets at $50 a pop at fiftydollarhouse.com.
For auctoin-winner Karen McHale, Tom -- who has described himself as a down-on-his-luck mortgage broker -- and his wife took on all closing costs, and the "buyer" inherited the home and the property taxes that come with it. The Walterses purchased the home for $425,000 in a 2006 foreclosure sale, according to property records, and they added an estimated $750,000 in improvements, according to a November Washington Post article.
While similar raffles have popped up in numerous states, they're not the only trick in the book. Real estate agents have pulled out new stops to prep houses for sale, including teaching housecleaning to sloppy sellers and paying out-of-pocket for major improvements, such as a new gas line. In the Seattle suburbs, homeowner Justin Wilcox created a reverse eBay for his house -- dropping the price by $10,000 each week on bothellcountdown.com. Originally listed at $500,000, the home sold for $409,500 after about three months.
Sure, these stunts have added levity to a dreary winter. But adding a "SOLD" sign is another story. Prior to a successful auction on Jan. 23, the Walterses' raffle had been rescheduled twice -- from this past September to Dec. 31, then to late January -- and the number of tickets the charity must sell to facilitate the raffle had been cut from 31,000 to 27,000. At the deadline, it was about 3,000 tickets short of the revised goal, according to the Washington Post.
"It has been quite a learning experience," according to the lead message on fiftydollarhouse.com, "and if we do this again ... it will run much smoother."