A $1.6 million house for $100 — and lots of luck    Teaming up to raffle a new house in Phoenix are Alan Klatsky of Prestige Development Inc. (left) and Bob Brantley, president of the Universal Peacemakers Foundation. (Baltimore Sun photo by Amy Davis / July 13, 2009) Would you take a $100 chance on winning a $1.6 million house? Organizers of an estate home raffle in Baltimore County are betting as many as 35,000 people will step up to buy a ticket, compelled by the unusually big prize - a 5-bedroom mini-mansion on an estate lot in Phoenix - and the chance to help out a local charity. House raffles such as this one have been used as fundraisers by a handful of nonprofits for years, and they are a growing phenomenon as home sellers caught in a recession look for creative ways to stand out and nonprofits seek alternative funding. Requests to put on raffles in Maryland have multiplied during the past two years. In Maryland and other states, a home seller must work with a nonprofit, which buys and raffles off the home and typically pays the marketing costs. If the nonprofit can't sell enough tickets to buy the home at the appraised value and make an agreed-upon minimum profit, the raffle must be canceled and the ticket money refunded. For homeowners, "it's a creative new idea," said Ser Greene, who started a Web site a year ago to link nonprofits with homeowners who want to sell through a raffle. "If your home is chosen to partner with a nonprofit, it's easier than trying to sell your home in this marketplace. A nonprofit will buy the house at the appraised value. It's another option when you're trying to move." For the raffle in Phoenix, in Baltimore County, custom builder Alan Klatsky of Prestige Development Inc. has teamed with Upperco-based nonprofit the Universal Peacemakers Foundation, which helps financially troubled homeowners, on what they've dubbed the Great American Dream Home Raffle. The idea is to raise $3.5 million selling tickets online, enough so the nonprofit can pay Klatsky the appraised value of the newly constructed model home and have money to start an endowment fund and expand counseling services. The holder of the winning ticket to be drawn Oct. 15 gets the house. It's a 6,200-square-foot "European" style design on 1 1/2 acres with a huge center hall, gourmet kitchen, walnut floors, 16-foot ceilings and a his and hers marble bath in the first-floor master suite. Klatsky said he came up with the raffle idea about three months ago after completing the model for the 11-home Brighton Hills subdivision, where no homes have sold yet. "The house is sitting there, and the real estate market is slow," said Klatsky, who said he liked the idea of helping out a nonprofit, and "If I'm able to get some exposure to sell other lots, that would be terrific." Maryland is seeing growing numbers of applications. The Maryland Secretary of State's office, which approves applications, received 11 this year and 11 last year, up from just one in 2007 and none in recent memory before that, said Michael Schlein, an investigator in the charities and legal services division. Of 11 submitted this year, nine are under review. That includes the Universal Peacemakers' application, Schlein said. In another raffle planned for this year, Operation Second Chance hopes to raffle two houses in Hagerstown worth a total $180,500 on Sept. 15. Of the 12 applications in 2008 and 2007, four never followed through on their applications, five were unable to sell the minimum number of tickets and two others were completed. Those included a $370,000 house in Hagerstown, raffled in March 2008 by San Mar Children's Home, which raised $214,126, and a $1 million house in Annapolis, raffled in January by We Care and Friends in Annapolis, which provides funding for drug and alcohol rehabilitation, and raised more than $25,162, according to the state. Successful house raffles are able to meet their ticket-selling goals, resulting in a sale for the home seller, funds for the nonprofit and, for a lucky winner, a house, clear of a mortgage - though federal and state taxes apply, at an estimated 40 percent of the value of the house. But raffles don't always work. A nonprofit risks losing the money spent marketing and planning the event. Even successful raffles can be problematic - for the winner. Winners of house raffles need to pay income taxes on their prize as well as property taxes, which could require securing a mortgage or selling a current home, neither of which are sure bets amid tightened credit. "It can be an issue if you are not prepared to take on a mortgage for the new taxes," said Greene, of USAHomeraffle, noting that in the case of the Hagerstown farmhouse raffle, the winner ran into problems when he couldn't sell his current home and ended up with two mortgages. Two of the groups that attempted to raffle off houses in Maryland last year but had to cancel them included Baltimore-based Poets Athletic Club Inc., which mentors city elementary schoolchildren and offers scholarships, and Food Link Inc. of Annapolis, a nonprofit that provides other charities with donated food. Poets Athletic Club planned to raffle a $186,000 single-family house in Owings Mills, offered by a homeowner having difficulty selling, but fell short in ticket sales and ended up refunding the $100 tickets. "The bottom line, right now with the way the economy is, it's really hard to do fundraisers," said Carl Beasley, manager of the club. Food Link had been approached by a Dunkirk, Anne Arundel County, homeowner about raffling a $550,000 house the owners wanted to sell to move out of state. The homeowner "was so taken with the idea that you could not only sell, but have this vehicle to take the proceeds and help a nonprofit helping people in your community," said Cathy Holstrom, Food Link executive director. But "it's a lot more complicated than it sounds. We actually lost a lost of money on the raffle. Every transaction cost us money, and we ended up losing thousands of dollars." Some charities, though, have found a winning formula for house raffles. The North Idaho College foundation has been raffling houses built by North Idaho College's carpentry students for 16 years. The foundation typically sells 5,000 tickets at $100 each. This year's raffle of a $300,000 house raised $190,000, some of which will go toward grants and scholarships for the community college. The family that won plans to live in the house. "It really has been a signature event for our foundation, which opens the door to ways we can help future students and programs at the college," said Rayelle Anderson, executive director. House raffles sometimes give winners the choice of a house or cash, or offer prizes to runners-up. Some homes are mega-mansions, others are more modest. The Web site USAhomeraffle.com, which lists upcoming raffles and links to Web sites where people can buy tickets, currently lists 14 upcoming raffles across the country. The Wisdom of the Ages Worldwide Inc. is selling $20 tickets to win a furnished, custom home and a Mercedes Benz SL 500 in a gated community in Ocala, Fla. On a more modest scale, the Bit by Bit Therapy organization is offering the prize of a 2,160-square-foot townhouse in Coral Springs, Fla. The organizers of the Phoenix house raffle say they would need to sell 20,000 tickets to proceed, though they haven't ruled out seeking an extension and a later raffle date from the state. Robert Brantley, the managing director of the Universal Peacemakers Foundation, a small nonprofit founded in 1994 by Brantley, an ordained minister, and his wife, says he feels confident about selling tens of thousands of raffle tickets. He sees the raffle as a chance to greatly expand the group's services and raise as much as $1 million. Brantley, a financial and estate planner, and his wife, a clinical psychologist, focus on financial and family and marriage counseling. But they want also to help homeowners facing foreclosure or who have lost a home. They would offer assistance with rent or furniture storage and eventually envision offering financial assistance so a homeowner could pay off tax liens or get bridge loans to avoid foreclosure. "People want to help people," Brantley said. "This gorgeous house is a sweetener. Some family will win this home. "Most of the people we're talking about helping don't have a home like this," he said. "This is a mansion to most people. But if we can leverage a house like this to give hope to people to hold onto their $250,000 home, that's great."  House raffle Tickets: tgadreamhomeraffle.com Drawing date: Oct. 15 at 13306 Brighton View Court, Phoenix. (Winner need not be present to win) Prize: 5 bedroom, 5 1/2 -bath estate home, featuring a 3-car garage, granite counters in the kitchen, a gas fireplace with floor to ceiling stone, a marble powder room and closets by Chesapeake Closets Benefits: The Universal Peacemakers Foundation, Upperco Fine print: If 20,000 tickets have not been sold by the date of the drawing, Universal Peacemakers may refund all money less 1 percent and cancel the drawing; the drawing date could also be extended.