A sham house is a house or home that is built to look like it has an abundance of square footage from the outside, but is actually quite small on the inside, like when the garage is attached and the garage door is not visible from the street, making the garage appear to be living space from the outside when it actually is just the garage.
"Wow, did you see Chuck's new house? I drove by it today and man, is it impressive! He must have like 5 bedrooms, 2 living rooms and a game room in that thing!"
"Yeah, he invited me over when he first bought it, and its smaller than it looks. It's just a sham house. He calls it his palace, but I was like; "Yeah right, more like BuckingSHAM Palace.""