Written by Benny L. Kass
Question: I am interested in moving my real estate by using an essay contest. Is it legal? What is the procedure? Do you have any comments about the usefulness of this technique?
Answer: I am personally very much opposed to using an essay contest for the sale — or purchase — of a house.
When the sponsor of the essay contest receives sufficient funds, they will declare the essay contest closed and then a winner will be selected. Often, the sponsor of the contest announces in advance that the contest will proceed only if a fixed amount of money is received. Usually, this amount is at least equal to what the sponsor believes the house is worth.
My first objection goes to whether the sponsor is honest. Unless there are some external controls established, all of the people who pay their money may find that they have all lost, and the only winner is the sponsor. Indeed, potential entrants into this essay contest may not even have any proof that the sponsor actually owns a house, or if the house can be conveyed free of any liens, mortgages, or other clouds on title.
My second objection goes to whether this violates local laws on gambling. Generally, legislative bodies often distinguish legal gambling from illegal gambling by using the concept of “games of chance” as compared to “games of skill.” A game of chance can be considered a slot machine, whereby no skill whatsoever is involved when you pull the lever. However, as in many areas of the law, there are numerous grey areas. For example, if you play poker, while there clearly is an element of skill involved, you still have to rely on “chance” as to which cards will be drawn.
As far as this columnist is concerned, while one could argue that an essay contest involves “skill,” there still remains a strong possibility that these contest could, in fact, violate local laws.
A third objection to these essay contests goes to the question of who will judge the essay. What standards and what guidelines will be used in determining whether an essay is acceptable or not? This is very subjective, and I can foresee extensive litigation from unsuccessful candidates, challenging the sponsor and the sponsor’s judgment.
Thus, I cannot recommend that you even consider an essay contest to assist you in selling your house.
1. Lower the price. Often, sellers place unrealistic market values on their own house. If you are using the services of a real estate broker, consult with your broker and periodically reduce the price. Obviously, there will be some limitations on how low you can go, since if you have a mortgage and a real estate commission that has to be paid, these numbers will have to be entered into in a determination of your bottom line price.
2. Auction the property. There are a number of competent auctioneers who have experience in selling property — whether it be commercial, investment or residential real estate. These auctioneers are professional, and can give you the independent quality that is necessary in any such transaction.
3. Deed in lieu of foreclosure. Many lenders will reluctantly agree to allow you to deed them the property rather than having the lender spend the time and the money foreclosing on your house. While no one wants to lose their house in this fashion, it certainly is worth exploring with your lender. They have their own guidelines, and under certain circumstances may be willing to take the property off your hands. There is less risk that your credit will be tarnished if you deed the property in lieu of foreclosure to your lender, than if the property is in fact foreclosed upon.
4. Foreclosure. This is the last resort, but if your credit is already tarnished, and you just cannot make the mortgage payments, you have the option of letting a mortgage lender foreclose on you. There are many legal and financial implications involved when a house goes to foreclosure, and you must discuss all of these ramifications with your tax and legal advisors before you let the property go to foreclosure.