A FUNNY THING HAPPENED ON THE WAY TO SELLING THIS HEIGHTS BUNGALOW FOR $150 Three weeks since the announcement, and with a little more than a week remaining before the June 13 deadline, more than 2,000 essays have come in from would-be buyers requesting that Heights real estate agent Mark Wachs sell his Heights bungalow at 213 E. 23rd St. to them for one heartening reason or another. But writing in The Leader, Kim Hogstrom reveals a more curious development: The vast majority of the applicants either can’t or don’t want to follow Wachs’s instructions — or never bothered to look at them too closely. Only about 500 of the submitted 200-word essays came with the required $150 application fee. With enough fees coming in from also-rans, some fortunate buyer would be able to purchase the 2-bedroom, 1,056-sq.-ft., 2-bedroom, 1-bath bungalow for just $150 (plus title and closing costs) — and still allow Wachs to receive what he thinks the house is worth, which he hints is somewhere between $265K and $550K. On the website he set up for the offer, Wachs states that application fees will be refunded if he doesn’t end up with a buyer using this method; he also indicates he might extend the deadline. [The Leader; previously on Swamplot] Photo: Mark Wachs
I don’t get it… So he’s only going to sell if he gets his target sales price in “essay fees” ?
If so far he’s got only 500 people that have paid the fee, then that’s $75k. or a looooooooong way from his goal. As I mentioned when this came out — no way there will be enough suckers to make this happen. And “the fee will be returned” … uh huh… How many of those people sent it in that won’t have info with it to return the fee? My guess? A lot. So this guy might clear $50k then sell his place traditionally.
Oh geeze. Why are we even paying this guy any mind? My guess is he’s doing this more for attention than for the money (I realize the irony of that question given I’m commenting on this story :)
I’d like to see some of these essays.
The guy wants attention. I suggest we continue to give it to him, or at least to the circus tent he has erected, by following his antics and holding his feet to the fire if essayists don’t get their refunds when the bunk-alow doesn’t sell through this three ring affair.
Yes. a “funny thing” happened alright…a $150 application fee. that’s a load of BS,Mark Wachs. BTW, any realtor selling his/he r own home- get an INDEPENDENT third party appraisal. Not what the owner/realtor tells you he/she “thinks /feels” it is worth. Big difference.
This is absurd. He better make sure he returns every penny or look for one hell of a lawsuit. Really asinine.
Why are all the current comments so cynical? This is a creative and innovative way to sell a home. It is too bad people can’t follow the instructions. I was hoping for this to work out. Mr. Wachs, good luck to your family.
sounds like a a raffle. Is this method of selling legit ?
The Heights is still a sellers market, so why exactly does he feel the need to go to these ridiculous lengths to sell this house. I could possibly get with this lotto or raffle or whatever the hell this is if it were a buyers market, which it most certainly is not. This just looks like a pathetic cry for attention, so that Lemmings on Swamplot can call him “innovative” and the wretching “thinking outside of the box”. Dude just get a reputable realtor and let them sell your house, it will save you on envelopes and stamps and potentially lawyer fees.
‘taxcpa’ on the previous comments mentioned the best reason why this wont work: the tax implications. This ‘selling’ method is changing the type of transaction and with it changing how that income will be taxed.
I think he wanted to sell the house to someone who wouldn’t tear it down. He could probably easily dump this thing for land value if he wanted. What he’s doing seems a lot harder than the traditional way and evidence that he’s doing it to preserve the neighborhood.
@ Mcg – Haters gonna hate.
I dunno, call me crazy, but maybe the seller thought this would be a fun and interesting thing to do. Maybe he hasn’t had the hope, curiosity, and whimsy of his life boiled out of him yet and replaced with the inveterate cynicism of a daily internet message board commenter.
Or maybe it’s for the money. Whatevs.
I can’t find “whimsy” in the Texas Charitable Raffle Enabling Act (https://www.texasattorneygeneral.gov/cpd/charities-nonprofits-charitable-raffles). This is against the law, the same as operating a casino. Don’t like the law? Work to change the law.
“Taxcpa” had a good comment, but it was focused on the tax effect on the seller. The more important tax effect is on the “buyer”, i.e., the winner of the contest. Since winning is based on “skill” – writing the essay – the prize is ordinary income. So while you may think you have gotten the house for $150, you will be writing a check to Uncle Sam for something over $100,000. So much for the “free” house!
Seller is a real estate agent. This stunt is free publicity. /thread
Houstonian- I seriously doubt this “essay contest” was designed to protect the house from the wrecking ball. My guess is that the homeowner was hoping enough people would be willing to risk $150 so he would clear in excess of actual value and pick up tons of free publicity.
Lets take the tax issue a step further. I think one could finaggle this deal where tax liability would not be an issue. The seller can argue that the Essay is merely a letter of offer (There’s no legal standard how a real estate transaction offer should be formatted). The $150 is the Earnest Money or Option Fee. Then they go through the standard closing process at a title co where the home is sold at $150. The Seller theoretically sells the home at a huge loss which SHOULD offset any taxes on the gain of keeping the other Option Fees. Or even simpler, since all the other Option Fees were for the same house then they may count as simple profit on the house (which is not taxable in most cases).
As far as the buyer is concerned, if he went through closing and paid $150 it is not a gift but a purchase, and it is immaterial what the real value of the house is. People buy house for under appraised value all the time and they never have to pay taxes on the built in equity.
Yeah, commonsense, go ahead and try that with the IRS and let us know how it comes out. (I think they let folks write letters while locked up, am I right?)
Although the seller is creative, I agree with other commentators’ misgivings and I’m surprised they went this route considering time value of money. Nearby home comps suggest the seller would clear more $ had he just outright sold it for land value only. Also the Inn that inspired the seller – check it out! The reason they reached their goal of 7500 entrants at $125/ea (looks like they just picked a winner out of the top 20 independently vetted finalists) is because it’s immaculately renovated, it sits on an incredible piece of land, and has a great story to go along with it. Although this home is in a pretty nice Heights location it arguably qualifies as a tear down (the inspection report is abysmal even as bungalows go) and sits on a typical, Heights-sized lot.
Hate to jump on the band wagon but I’d wager the seller doesn’t get enough paying entrants…
@commonsense, there is no deduction for a loss on a home used as a personal residence. The $150 fees would all be income as well. There is no tax benefit to doing this, just the potential to sell the house for more than it’s worth, if enough people are willing to gamble that their essay is the best. I still think it may be an illegal raffle.
Folks, this is not a “raffle”. Texas has a statute, the “Charitable Raffle Enabling Act”, that defines what a raffle is for regulatory purposes. A raffle is defined as “the award of one or more prizes by chance at a single occasion among a single pool or group of persons who have paid or promised a thing of value for a ticket that represents a chance to win a prize.”
The key words here are “by chance”. The promoter here will “grade” the submittals, and select the “most worthy”. Not by chance at all, but tied to superior writing (at least on its face). It is an essay contest, dependent on skill (kinda like an episode of “The Price is Right”), and the ultimate prize is therefore the result of labor, and of great interest to the IRS as I have pointed out in this thread.
But not a “raffle”.