Poor Nicolas Cage. The actor and star of such movies as "Kick-Ass" and "National Treasure" is having terrible income tax problems, and as a result, a lot of the real estate he owns has been going into foreclosure. I wrote a story in November about him losing the New Orleans houses. Maybe it's "misery loves company," but that piece is one of my best-read on Moneywatch.
Then, earlier this month, we had the Los Angeles Times making fun of Cage's sense of decorating after his Bel-Air house failed to sell at foreclosure auction.
Well, let me tell you, while bad decorating can hurt a sale, you can usually make up for it on price. It isn't that Cage's Bel-Air house -- where the bidding opened at $10.4 million -- didn't sell because buyers didn't like the paint colors. It didn't sell because it had existing indebtedness on it -- according to the L.A. Times, $18 million worth.
Think like an auction buyer: it isn't that you could snap up the six-bedroom Tudor-style mansion with pool for $10.4 million, but you'd also have to clear the $18 million worth of outstanding loans on the house. So the starting price was really $28.4 million -- too high, apparently, because there were no takers.
Be aware, if you're shopping for foreclosures or at auction, that this is a common wrinkle with these types of sales. The starting bid pulls you in, but as a buyer, you need to worry about the "free and clear" price. Remember that "too good to be true" often is.
And here's hoping one of our favorite action stars gets "free and clear" of his troubles.