Donna Kalman, president of the Perfect Place, wants to change the way homes are sold — by “giving” them away. Her company has been providing short-term furnished apartments to clients in South Florida for 20 years, and at the beginning of September, it began its first give-away contest.
Through the Perfect Place Contest, Kalman is giving away three South Florida apartments — two of which are hers — to participants who score the most points in a word jumble game. Another South Florida apartment that Kalman owns is available for a year, rent-free, and a home in Ironton, MO. is also being given away. Points are awarded based on the number and complexity of words unscrambled.
But, as one might suspect, the apartments aren’t really free.
In a down market, instead of struggling to sell a home to one buyer, she hopes to get back the cost of all three properties through the contests, by charging an entry fee of $10 for each Florida home and $25 for the Missouri home. Homes are not given away until the appraised property value of each home is reached through fees paid by contestants, thereby giving homeowners the base value of their homes.
The South Florida properties include a 1,246-square-foot unit in Coconut Creek, valued at $250,000; a 1,244-square-foot apartment in Fort Lauderdale, valued at $350,000, both owned by Kalman; and the 584-square-foot condo-hotel within the Q Club Resort & Residences, in Fort Lauderdale, valued at $600,000.
Since owners cannot make more than the appraised value of their home, according to state laws, contests entries are limited to 25,000 for the Coconut Creek home, 35,000 for the Fort Lauderdale home and 60,000 for the Q Club apartment. A 985-square-foot home in Delray Beach owned by Kalman, with a monthly rent of $4,000, will also be given to a winner for a year, rent-free. That contest is limited to 4,800 entries.
Kalman brings in more money by charging a $400 fee for homeowners to list properties.
The competitions were set to end 30 days after the September 1st start-date, but Kalman has extended the contests to December 28th because the property values weren’t reached through the entries. She said she also lowered the contest entry fees in response to feedback from players, who wanted more opportunities to play.
If the home is given away to a contest winner, 10 percent of the value is divided between the credit card companies, contest organizers and broker, if one is involved, although Kalman says that this percentage may change for future contests.
Eric Weldon of Menu Realty, whose client owns the Q Club property, said that if owners attempted to sell a property through a bank, it could likely sell the property at a loss. The contest is an effort for owners to gain the full value for their homes.
“It’s not about the sellers making a profit in a down market. It’s about breaking even. They need to sell for x-amount of money to pay off a mortgage,” said Weldon.
“No one is going to get rich quick on their home,” Kalman added.
If the homes are not given away in the given time period, the top three competitors will win American Express Gift Cards in amounts ranging from $500 to $30,000, depending on the number of entries. The owners will then be free to sell the homes traditionally, but Kalman seems willing to extend the contests further, as she expects it to take at least a few months before homes are successfully given away.
This isn’t the first home giveaway contest that has taken place.
A New York Times article described the growing popularity of real estate games, where homes are raffled off and given away. Setting up such contests of chance can be difficult, because many state regulations do not allow the use of raffles unless the owner is partnered with a non-profit organization, in addition to owners not making more than the appraised value of their homes.
Because the Perfect Place Contest chooses winners based on skill, it has greater leeway. The Office of the Florida Attorney General stated that according to Florida’s gambling laws, contests of skill are legal as long as all rules are disclosed.
Participants can also file complaints to the office if they believe they are being taken advantage of.
The office cited another contest that gave away a home based on the best essay submitted, but only if a quota of $150,000 was reached through the contest’s $50 entry fees. If the quota wasn’t reached, then the winner would only receive $2,500.