A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide for high-net-worth investors and consumers. Sign up To receive future editions delivered directly to your inbox.
Experts say the rich have taken “quiet wealth” to the next level, turning to private purchases of luxury homes, art and classic cars to avoid attracting attention.
Auction houses and luxury real estate agents say wealthy buyers and sellers 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—secret transactions between discreet buyers and sellers—are growing.
While public auction sales at Sotheby’s, Christie’s and Phillips combined fell by 19% last year, private sales at Sotheby’s and Christie’s increased by 4% and 5% respectively, with the two auction houses’ total private sales to $2.4 billion. CNBC reports In February, Christie’s auction house sold a Mark Rothko painting to hedge fund billionaire Ken Griffin for more than $100 million, even as public auctions continue to decline .
Classic cars are also turning to private sales, especially the most expensive and rare models. RM Sotheby’s is a classic car auction house that has been selling Ferraris, Porsches and other trophy cars at public auction for more than 30 years. But sales at its new RM Sotheby’s private auction division have more than quadrupled in the past four years, according to Shelby Myers, global head of private auctions at RM Sotheby’s.
Private sales, which are discreet car brokerage transactions between buyers and sellers without auctions or public pricing, currently account for nearly a third of revenue, he said.
“We do see a trend of people wanting to trade privately,” Myers said. “Caution is key today. People can buy without the world watching.”
Social media, technology and cooling collectibles prices have fueled growth in private sales of classic cars, art, real estate and other markets. When art or classic cars go up for auction, the results (and sometimes even the sellers) are highly public and spread on social media and blogs.
Collectibles experts say sellers don’t want to take the chance of putting a valuable item up for auction only to have it exposed in public at auction.
“Now when someone loses money on a sale, it’s very public and no one wants to do that,” Myers said. “Until a few years ago you could buy a car at auction and the price wouldn’t be spread around. on social media.”
Collectors who like to display their cars at events and awards shows also shy away from auctions, where viewers are more likely to know how much owners paid.
“Car enthusiasts used to be a relatively small, close-knit group,” Myers said. “Now, when a major collector shows off their car, it spreads like wildfire on blogs and around the internet. Everyone can see who the owner is and how much they paid.”
In real estate, many of the largest transactions in Manhattan, Malibu, Aspen, the Hamptons and Palm Beach are now private or “off-market” sales. Off-market properties, also known as “whisper” or “pocket” listings, are not listed on multiple listing services or on public websites, but are bought and sold quietly among a select group of agents and buyers.
A townhouse in Manhattan’s Greenwich Village sold for $72.5 million in an off-market transaction this year, making it the most expensive townhouse ever sold downtown. A 13,000-square-foot mansion in Palm Beach has sold off-market for $60 million, becoming one of the most expensive non-oceanfront homes ever sold on the island. Aspen’s first $100 million-plus deal – Patrick Dovigi’s Red Mountain mansion sold to billionaires Steve Wynn and Thomas Peterffy (Thomas Peterffy) – is traded over the counter, with brokers representing buyers and sellers.
Los Angeles is considered the birthplace of OTC listings, starting in the 1980s and ’90s when celebrities and movie stars wanted to avoid overzealous fans visiting their listed homes.
Over time, sellers who are wealthy but not famous have also joined the off-market craze, said Ernie Carswell, an agent with Douglas Elliman Real Estate in Los Angeles.
“Even the average multimillionaire or billionaire likes the idea of selling without the press and privacy intrusion,” Carswell said.
Carswell said he currently has a billionaire client in New York who wants a special property in Los Angeles, so Carswell is considering a giant mansion owned by a Middle Eastern billionaire that is only For sale to select buyers. He also struck a deal with a celebrity in Palm Springs to sell a home that he didn’t want to show publicly to a billionaire buyer who didn’t want any photos of his new home to appear online. .
“They don’t want thieves to know how to get into a bedroom, or how much land there is, or how to get through a hedge,” Caswell said. “I blame technology.”
Carswell said off-market listings didn’t make sense for properties priced under $5 million because they had a larger pool of potential buyers and could benefit from wider marketing. But for a particular mega-home selling for more than $20 million in Malibu, Bel Air or Beverly Hills, the list of potential buyers is smaller and most are already known to agents, leaving the off-market The agreement is more attractive.
That makes broker relationships even more important — especially for wealthy people, Carswell said.
“The need for highly skilled and well-connected real estate professionals has never been more important, especially at the top end of the market,” he said.
Still, some agents say private sellers are unable to get top prices for even expensive properties because they limit the number of potential buyers.
“They’re leaving money on the table,” said Douglas Elliman real estate agent Noble Black. “There are legitimate reasons not to go public, you want privacy and discretion. But you pay a premium for that.”
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