A version of this article first appeared in CNBC’s Inside Wealth newsletter by Robert Frank, a weekly guide for high-net-worth investors and consumers. sign up Receive future editions directly to your inbox.
The wealthy are taking their “quiet wealth” to a new level, turning to private purchases of mansions, art and classic cars to avoid the spotlight, experts say.
Auction houses and luxury real estate brokers say wealthy sellers and buyers are increasingly turning to private sales and off-market listings to avoid social media and prying eyes. While public auction sales are declining in the art world, private sales, which take place behind closed doors between cautious buyers and sellers, are on the rise.
Last year, combined public auction sales at Sotheby’s, Christie’s and Phillips fell 19 percent, but private sales increased 4 percent at Sotheby’s and 5 percent at Christie’s, bringing the two auction houses’ combined sales to $2.4 billion. CNBC reported In February, it was reported that Christie’s had sold a Mark Rothko painting to hedge fund billionaire Ken Griffin for more than $100 million, despite public auctions continuing to slump.
Classic cars are also seeing a shift towards private sales, especially the most expensive and rare models. Classic car auction house RM Sotheby’s has been selling trophy Ferraris, Porsches and other trophy cars at public auction for more than 30 years. But sales in the newly formed RM Sotheby’s private sales division have more than quadrupled in the past four years, said Shelby Myers, global head of private sales at RM Sotheby’s.
Private sales, which discreetly broker cars between buyers and sellers without auctions or posted prices, now account for nearly a third of revenue, he said.
“We’re definitely seeing a trend where people want to trade privately,” Myers said. “Discretion is important today. People can shop without the whole world watching.”
The rise in private sales of classic cars, art, real estate, and other markets is being fueled by social media, technology, and falling prices for collectibles. When works of art or classic cars are put up for auction, the results, and in some cases the seller, receive a lot of attention and are spread on social media and blogs.
Collectibles experts say sellers don’t want to put valuable items up for auction and risk having them end up on the auction block in public.
“It’s very public right now for someone to lose money on a sale, and no one wants that,” Myers said. “A few years ago, you could buy a car at auction and the price wouldn’t be splashed all over social media.”
Collectors who prefer to display their cars at events and award shows also shy away from auctions because viewers are likely to know how much the owner paid for them.
“Car enthusiasts used to be a relatively small, close-knit group,” Myers said. “Now, when a major collector puts their car on display, the information spreads like wildfire across blogs and the internet, and everyone can see who the owner is and how much they paid for it.”
In the real estate industry, many of the biggest deals in Manhattan, Malibu, Aspen, the Hamptons, and Palm Beach are now private sales or “off-market” sales. Off-market properties, also known as “whisper” or “pocket” listings, are not listed on multiple listing services or public websites, but are traded quietly among a select group of brokers and buyers.
A townhouse in Manhattan’s Greenwich Village sold earlier this year for $72.5 million in an off-market transaction, making it the most expensive townhouse ever sold downtown. A 13,000-square-foot mansion in Palm Beach sold off-market for $60 million, making it one of the most expensive non-waterfront homes ever sold on the island. And Aspen’s first $100 million-plus sale (Patrick Dovisi’s mansion in Red Mountain to billionaires Steve Wynn and Thomas Peterffy) was done off-market, with brokers Represented both buyers and sellers.
Los Angeles is considered the birthplace of off-market trading, which began in the 1980s and 1990s when celebrities and movie stars wanted to avoid having their publicly traded homes visited by obsessive fans. I am.
Over time, wealthy but not famous sellers have joined the off-market property boom, said Ernie Carswell, a Douglas Elliman real estate agent in Los Angeles.
“Even the average millionaire or billionaire likes the idea of selling without media or invasion of privacy,” Carswell said.
Mr. Carswell currently has a New York billionaire client who wants a special property in Los Angeles, so Mr. Carswell is owned by a Middle Eastern billionaire and offers only to select buyers. He said he is considering a mansion. In Palm Springs, he’s also working on deals with celebrities who sell homes they don’t want to see publicly to billionaire buyers who don’t want photos of their new homes posted on the Web.
“They don’t want burglars knowing how to get to their bedrooms, how big their property is, how to get through hedges, etc.,” Mr Carswell said. “I blame technology.”
Carswell said off-market listings don’t make sense because properties under $5 million have a greater purchase potential and benefit from extensive marketing. But when the price of an exclusive megahouse in Malibu, Bel Air, or Beverly Hills exceeds $20 million, the list of potential buyers is small and most are already known to brokers, making off-market deals more attractive. Become.
That makes relationships with brokers even more important, especially for high-net-worth individuals, Carswell said.
“The need for skilled, connected real estate professionals has never been more valuable, especially at the high end,” he said.
Still, some brokers say sellers who take their properties private, even for expensive properties, are unable to get the highest prices because they limit the pool of potential buyers.
“They’re leaving money on the table,” said Noble Black, a real estate broker at Douglas Elliman. “There are good reasons for not going public, and you need privacy and discretion. But you’re paying a premium for that.”
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