Lotteries: A New Method for Homebuyers in DC MD VA area

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Demand among homebuyers is so high in some parts of the country that builders are holding lotteries to decide who gets to purchase homes in their developments.

O’Brien Homes started holding a monthly housing lottery for its 228-unit development called Fusion in Sunnyvale, Calf., after seeing throngs of prospective buyers camp out at the openings of other new condo complexes in the area.

“We didn’t want that,” said Susie Frimel, a spokeswoman for O’Brien Homes. “We wanted our customers to be pleased with the process.”

Each month, as new sections of the development came under construction, roughly 50 buyers would show up at O’Brien Homes’ sales office hoping to be picked for one of the 10 or so sites available. The participants were already pre-qualified for a mortgage and had their down payment in place. After being assigned a number, they crossed their fingers and waited for each bingo ball to be plucked from the tumbler.

For each unit, the company drew a winner and a backup, just in case the winner backed out.

Lotteries are not a perfect solution, especially for the buyer who walks away empty-handed.

“Some people would come back month after month,” said Frimel. “It got very frustrating for them.”

Adding to that frustration was that home prices rose virtually every time a new group of homes went on sale. The two-, three- and four-bedroom homes started out between $420,000 and $620,000. The last grouping went for $555,000 to $815,000, a 32% increase.

Source: CNNMoney

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