It’s that time of the year again, when thousands of folks sit around watching HGTV’s Dream House giveaway and then hurry off to their computers or post offices to enter the drawing for the $2 million plus grand prize.
We watched the program on New Year’s Day, as we’ve done for the last few years. We were a bit underwhelmed by this year’s house in the Florida Keys (see it for yourself on the HGTV website). Compared to some of the previous dream homes, it was nothing special. Oh, the views are gorgeous, but the house itself? Not so much.
Maybe I’d feel differently if I didn’t already live in my own dream house. It’s bigger in square footage than the one they’re promoting, it has more land (and our pool is our own, not shared with seven other houses), and it sits on the shore of a placid lake, rather than the hurricane-prone Gulf. Oh, and it cost less than a fourth what their dream home is valued at.
Nonetheless, we enjoy seeing what’s being offered, but it makes me sad to read the message boards on the website, where people speculate about how they would redecorate or how they’d use the rooms if they won. So many folks don’t seem to realize that it’s virtually impossible for a winner who isn’t wealthy (i.e., making $500,000 year or more) to keep and live in the dream house. Federal income taxes alone will come to over $770,000. Even if you take out a mortgage on the house to pay those, you’re looking at annual property taxes in the range of $15,000 or more, probably stiff HOA fees, and how much is flood insurance going to cost in that location (if you can even get it)? Read the rules: you’re also responsible for closing costs (typically 1 or 2 percent of the cost of the house, so in this case we’re talking $20,000 to $40,000), not to mention all the "little" expenses such as title and transfer fees on the vehicle and so forth.
Of course, if you’re smart about it, you can still come out with a nice little chunk of change after selling the house and paying off all those taxes and fees. My guess is that in today’s real estate market, you’d likely end up with $500,000 to $700,000 left over. Nothing to sneeze at – but most of those who are imagining they could move in and start living the high life in the house are going to be sadly disappointed if they do win.
The only previous winner who tried it (winners of the 2005 dream house in Tyler, Texas) ended up badly in debt and the family is being forced to auction the house off on January 12th (see http://www.kltv.com/Global/story.asp?S=7556414 for more info).
If you do win, you’re probably in for some major hassle factor after the initial thrill wears off: the usual time and effort involved in getting a house on the market and getting it sold, but on a grander scale. Not that the half a million dollar profit isn’t worth the time and trouble. Just remember, before you click that "Submit Entry" button, that there ain’t no such thing as a free lunch – or a free house. And if you don’t win, well, maybe there’ll be just a little relief mixed in there with the disappointment.