A Phoenix TV station is calling a supposed house giveaway a "contest" when it costs $150 to enter. There are issues with this on several levels.
Let's leave FOX KSAZ-TV channel 10, ABC15, and CBS5 calling this a "contest" (when it is not) for the media and legal folks to challenge. The station aired and published their "news" story about a local investor "giving away" a $500,000 house as if he is trying to help with the housing market.
This story admits that entering with an essay of 250 words or less about "why you would love to win this house" requires a cost of $150. There is also a published "limit" of 5,500 entries, which is really to encourage consumers to enter this so-called "contest".
When you do the math, and project that 5,500 people would be "willing" to spend $150 for their chance at a $500,000 home, you realize this would project to a take of $825,000 by the "contest" holders. For the "prize" valued at $500,000?
If half that many entries show up, the "take" would be $412,500. Consider that there would be no commissions, appraisals, and numerous other costs associated with a legitimate real estate transaction, and you will find that a true sale at $500,000 would leave the seller with an actual amount in that vicinity.
Upon reading the fine print in the web site set up for this house, the "winner" would technically have to purchase the house for $10.00, in addition to having to pay title and other transaction fees which could total more than $3,000.
However, the legal concern about holding this as a "contest" (not to mention a TV station reporting this as legitimate!), is only some of the problem. The rest, unfortunately, relate to the current real estate market.
This so-called "news story" claims that this is a "home valued at $500,000". Again, none of these TV stations (along with radio station KTAR) bothered to check into this "story" any further.
Where is any proof that this home is valued for that amount?
In researching local properties, I came up with TEN homes, also 5 bedroom 4 bath (as is this one), listed at UNDER $450,000, all within the same zip code as this house being "given away". (My source was Realtor.com on August 4, 2015)
If the investors plan to "give away" this house were to actually happen, having a $10.00 purchase price showing for this home would, naturally, kill home values within the area. Just wait until a potential buyer in that same neighborhood puts in a bid of $12 to $20 for another 5 bedroom house based on a recent comp!
I'm sure some of you think that won't happen, and that I'm being ridiculous. If you are among those who do, consider this. When homes are sold for partial value due to foreclosure or short sale, those low "sale" prices count within home sales statistics and have served to reduce home values significantly in many parts of the country. This is the cause of millions of faithful home owners going under water with their mortgages, and leaving them, to quote U2, stuck in a moment they can't get out of.
Yet, we have TV and radio stations in one of the nation's most important media markets "reporting" this so-called contest, and possibly contributing to a local real estate disaster.
Please tell me I'm not the only one who is concerned about this..........
Places in Time III
4 days ago