The official website for the 2012 Ronald McDonald San Diego Dream House Raffle states that you could win a 2.2 million dollar home for the cost of a $150 raffle ticket. Only 37,000 raffle tickets will be sold with thousands of dollars worth of prizes to be won in addition to the grand prize luxury estate. The proceeds will benefit the Ronald McDonald House Charities of San Diego.
Being a real estate broker in San Diego, I was curious to know the answers to the following questions:
- Where exactly is the Dream House located?
- How much is the Dream House ACTUALLY worth?
- What costs are associated with winning this $2.2 million mansion?
After a few quick Google searches, I found very little data on the subject. So I decided to uncover the answers for myself and make my findings available to my readers.
1. WHAT IS THE ACTUAL LOCATION OF THE 2012 SAN DIEGO DREAM HOUSE?
The website and ads will not disclose the location of the home, but simply state that it’s in an “exclusive gated community.” After a little bit of research on the public county records, I was easily able to locate the address for the San Diego Dream House: 3284 Lone Hill Lane, Encinitas, CA 92024. The picturesque North County beach community of Encinitas, California could be your place of residence in exchange for a $150 raffle ticket. This home is a 5 bedroom, 5 bathroom sprawling estate with 4,575 square feet of living space on 2.25 acres (not 2.5 as advertised) with several other fantastic amenities. You can read more about the property details by clicking HERE.
But I wanted to know more than just the property’s location. In this current economy with its declining house values, I had my doubts about the home actually being worth $2.2 million. I wanted more information.
2. HOW MUCH IS THE 2012 SAN DIEGO DREAM HOUSE ACTUALLY WORTH?
According to www.sdraffle.com, the official rules state “RMHC-SD makes no guarantee that the Grand Prize winner will be able to sell the House for the value of $2,200,000.” Unfortunately, this home is not worth $2.2 million. The current owner tried to sell the house last year in July for $2.2 million and it sat on the market for nearly 3 months without ever opening escrow (MLS #: 110042597). Eventually the listing was cancelled.
So what IS this home actually worth? To answer this question effectively, you must compare the Dream House with other homes in the same neighborhood that have sold recently. Ironically, the house located directly next door to the Dream House, at 3256 Lone Hill Lane, closed escrow for $1,840,000 on January 26th, 2012 (MLS #: 110041583). This home has only 4 bedrooms but is MUCH larger in overall square footage and lot size. The picture below illustrates the differences & similarities between the two properties quite nicely (you can click on the picture to enlarge the image):
All things considered, I would give the San Diego Dream House a fair market value of somewhere between $1.6 and $1.8 million.
Even if you were lucky enough to win the San Diego Dream House, you would practically have to take out a mortgage on the house just to pay the taxes. This led me to my final question.
3. HOW MUCH WOULD IT COST IF YOU ACTUALLY WON THE 2012 SAN DIEGO DREAM HOUSE?
According to www.sdraffle.com, the official rules state that “At the time of closing, all federal and state income taxes based on the value of the House, a value of $2,200,000, will be due from the Grand Prize winner.”
This means that you will be paying income tax AND annual property tax on this multi-million dollar mansion if you won. The income taxes due will be based on your marginal tax rate because the value of the prize is on top of any income you’ve earned from employment and investments.
The costs associated with winning this home COULD include:
- Income Tax (35% Marginal Tax Rate of $2.2M) = $770,000
- Property tax on 2.2M @ 1.03929% = $22,864.38/yr (1,905.36/mo)
- HOA Fees = $900/yr ($75/mo)
- Average Utilities Estimate = $9600/yr ($800/mo)*
- Average Water/Sewer/Trash Estimate = $1200/yr ($100/mo)
- Homeowners Insurance Estimate = $2800/yr ($235/mo)**
- Landscaping & Maintenance = ???
- New furnishings = ???
The GRAND TOTAL of all estimated expenses for owning the Ronald McDonald San Diego Dream House in the first 12 months could be a whopping $807,364.38!!!
If the Grand Prize winner chooses NOT to take title to this beautiful Encinitas estate, then he/she would have the option to select the alternate award of a $1,500,000 annuity or a one-time cash payment of $1,100,000. All appropriate and required federal and state taxes will be withheld by RMHC-SD in accordance with federal and state law. At least 34,000 (out of the 37,000) raffle tickets must be sold for someone to win the Grand Prize Dream House. In the past, a dream home has been eligible three times, and only one winner has chosen the house over the alternative cash prize.
Bottom line is this: I am a huge supporter of non-profit organizations and raising money for good causes. I also feel, as a real estate broker, that it’s very important for the public to be educated about issues surrounding home ownership before signing the dotted line. So if you happen to be reading this article, and you actually win the Grand Prize Dream House (assuming you don’t have an extra $800,000 sitting in your bank account), my suggestion to you would be……….. JUST TAKE THE MONEY.
*Figure provided by SDG&E based on the average annual usage
**Figure provided by Mike Clinkenbeard with Farmers Insurance