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Can You Afford to 'Win' a $3 Million Mansion?

Published: Tuesday, 16 Jun 2009 | 1:07 PM ET

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By: Cindy Perman
Writer

When Laura Brannan and her husband first advertised $10 raffle tickets for a chance to win their $3 million waterfront mansion, people thought it was just another South Florida real-estate scam.

How many of these are you going to need to 'win' this house?

This one isn’t a scam, but it’s probably wise to be wary of offers that seem too good to be true.

The truth is, just because you win this raffle doesn’t mean you can afford to keep the house. You may just be signing up to be part of the latest trend — foreclosure. And just because you win doesn’t mean you’ll actually get the house.

Raffles like this can be dangerous because they lure people who don’t necessarily have the money to maintain a multimillion dollar home into thinking that they can.

How to Get a $3 Million Mansion for Just $10

Think about it: If you have the $500,000 to $1 million-plus you’re going to have to pay in income tax for winning such a pricey asset, would you be entering a $10 raffle in the first place?

So, often, these types of raffles wind up with the winner having to sell the home to pay the taxes.

But guess what? This is South Florida, one of the hardest hit regions in this recession, and the reason why the Brannans resorted to a raffle in the first place is because they couldn’t find a buyer for the home. (Well, they did find a few buyers, including a couple from Russia and one from Germany. But the buyers couldn’t get the financing — downpayments on jumbo mortgages and for foreigners are pretty hefty.)

Florida Luxury Home
Source: floridaluxuryauctions.com
When you walk in, what song lyric do you hear — 'I'm comin' home' or 'C'mon, take the money and run?!'

If you can’t afford the taxes, and you can’t sell it, you know what that means — you’re joining the foreclosure bandwagon.

It should also be noted that just because you “win” doesn’t mean you’ll actually get the house.

South Florida requires any raffle to involve a not-for-profit organization.

So, this is what they call a 50/50 drawing — if they don’t sell all 300,000 tickets, they’ll split the money, with 50 percent going to the winner and 50 percent going to charity.

That’s actually pretty common in these types of drawings.

So far, they’ve sold over 30,000 tickets. So, on the bright side, your $10 ticket could net you $150,000. Plus, their charity, the Mission of St. Francis, gets $150,000.

That’s probably the best-case scenario for most people — getting the money, not the house. But then, of course, that still leaves the Brannans with a $3 million house they can’t afford.

A word to the wise: If you’re going to invest the ten bucks in a raffle like this one, you should probably also get your self an attorney and an accountant.

Brannan said they’ll have a certified public accountant on hand the day of the drawing to answer any questions.

And, they have several financial investors who have offered to be there the day of the auction to assist anyone suffering from, er — winner’s remorse.

Brannan said if the winner realizes he or she can’t afford the house, the investors say they'll offer to buy the house from them in cash.

Of course, them being investors and said winner being desperate, they'll probably offer no more than 50 cents on the dollar for the house. Brannan said the house has been appraised for $1.9 million, which means you could net up to $1 million.

Not a bad return on a $10 investment.

Just don’t obsess over the numbers.

Take the money and go call your lawyer!

Oh, and don't be surprised if you don't see more of these housing raffles — Brannan said they've gotten calls from desperate homeowners from all over the country, asking for the Brannans to help raffle off their homes.

Brannan said they're thinking about it — they both work in the real-estate business and their income is 25 percent of what it once was.

But for now, they're just focused on this one.

Still interested? Tickets are available online at Floridaluxuryauctions.com or by phone at 1-888-71-TICKETS, You don’t need to be present to win.

Stocking Up:
Rather make your gambles in the market? Here's how some of the biggest mortgage lenders and homebuilders are doing today.

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