Mortgage broker raffling off his house

For $50, you can gamble on winning a house in Maryland:

In the casino of the housing market, Tom Walters is holding the wrong cards. He's a mortgage broker, so business has been slow, and on his own house, payments have risen to about $6,200 — too much to handle.

Instead of gambling on a sale, Walters and his wife decided to let others take a chance.

So for just $50, people can buy a raffle ticket for his six-bedroom, 4 1/2 -bath, 6,000-square-foot home on a two-acre parcel just outside of Annapolis. Estimated value? One million clams.

Walters is partnering with Annapolis-based We Care and Friends in the raffle venture because under Maryland law only charity groups can raffle off houses. The charity must sell at least 31,500 tickets to pay off the loans and keep its cut of at least 10 percent, Walters said.

This is the 10th house raffle attempted this year, according to the Maryland secretary of state's office. But only one, in Hagerstown, has been successful so far.

In the Walterses' raffle, the winner (to be picked Dec. 31) gets the home, free and clear. No closing costs. No mortgage payments. No broker fees. The Walterses get to walk away.

According to this article, the home was appraised for $1.28 during the summer. He also originally tried to have the drawing on September 27.

Even if the house really is worth $1.28 million, it's a stupid bet. According to the rules, if no drawing is held, you don't get all your money back. Instead, Tom Walters gets to skim 1%. Furthermore, he gets to cancel the raffle unless it raises at least $1,575,000. That mean you're paying $50 for a bet that on average is only worth at most $40.63 (assuming the $1.28 million appraisal didn't overvalue the house).

The math: $1,280,000 / $1,575,000= 0.813; $50 x 0.813 = $40.63