A version of this story 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 versions directly to your email.
According to experts, the wealthy have elevated "quiet wealth" to new heights by purchasing houses, art, and antique automobiles privately in order to escape notice.
Auction houses and luxury real estate agents say rich buyers and sellers are increasingly flocking to private deals and off-market listings to dodge social media and prying eyes. While public auction sales in the art world are dropping, private transactions, which occur behind closed doors between discreet buyers and sellers, are increasing. Last year, combined public auction sales for Sotheby's, Christie's, and Phillips dropped. Private sales grew by 19%, including 4% at Sotheby's and 5% at Christie's, reaching $2.4 billion between the two auction houses. CNBC reported in February that Christie's sold a Mark Rothko artwork to hedge-fund billionaire Ken Griffin for more than $100 million, despite the fact that public auctions were declining.
Classic automobiles are also experiencing a move toward private sales, particularly the more costly and uncommon types. For more than 30 years, RM Sotheby's has held public auctions for trophy Ferraris, Porsches, and other prize automobiles. However, Shelby Myers, global head of private sales at RM Sotheby's, reports that the company's newly formed private sales segment has seen sales more than treble in the last four years.
Private Sales, Cars that are privately brokered between buyer and seller without an auction or public pricing now account for roughly a third of income, he claims.
"We've definitely seen a trend where people want to transact privately," Myers stated. "Discretion today is essential. People can buy without the entire world looking at them."
The growth in private sales for historic vehicles, art, real estate, and other industries is being driven by social media, technology, and lower collector pricing. When a work of art or a classic automobile goes up for auction, the results, and occasionally the seller, are widely publicized via social media and blogs.
Collectibles experts say sellers don't want to chance bringing a prized item up for auction and having it stumble. Public auction.
"It's very public now when someone loses money on a sale, and no one wants that," Myers stated. "Up until a few years ago, you could buy a car at auction and the prices wouldn't be splattered all over social media."
Collectors who enjoy displaying their automobiles at events and award presentations are also avoiding auctions since observers are more likely to find out how much the owner spent.
"The car enthusiasts used to be a relatively small, tight-knit group," Myers stated. "Now, when a prominent collector displays their car, it spreads like wildfire throughout blogs and the internet. And everyone can see who the owner is and how much they paid.
In realty, Many of the most significant transactions in Manhattan, Malibu, Aspen, the Hamptons, and Palm Beach are now private or "off-market" sales. Off-market homes, often called as "whisper" or "pocket" listings, are not advertised on multiple listing systems or public websites, but instead are privately marketed to a small number of brokers and purchasers.
This year, a townhouse in Manhattan's Greenwich Village went off-market for $72.5 million, making it the most expensive home ever sold downtown. A 13,000-square-foot mansion in Palm Beach went off-market for $60 million, making it one of the most expensive non-waterfront properties ever sold on the island. And Aspen's first sale of over $100 million—Patrick Dovigi's house on Red Mountain to billionaires Steve Wynn and Thomas Peterffy—was off-market. The broker represents both the buyer and the seller.
Los Angeles is regarded as the birthplace of off-market agreements, which originated in the 1980s and 1990s when celebrities and movie stars wanted to prevent frenzied admirers visiting their listed properties.
According to Douglas Elliman real estate agent Ernie Carswell in Los Angeles, affluent and not-so-famous sellers have gradually joined the off-market frenzy.
"Even the average multi-millionaire or billionaire likes the idea of selling without the media and privacy invasion," Carswell stated.
Carswell stated that he now has a rich customer in New York who wants a unique property in Los Angeles, so he is looking into a mega-mansion owned by a Middle Eastern billionaire who is only offering it to select purchasers. He’s also I'm working on a deal in Palm Springs with a celebrity selling a property he doesn't want exhibited publicly to a rich buyer who doesn't want any images of his new home online.
"They don't want burglars to know how to get to the bedroom, or how much land there is or how to get through the hedges," said Carswell. "I blame technology."
Carswell stated that off-market listings do not make sense for houses under $5 million since they have a bigger potential buyer pool and benefit from greater marketing. However, for exceptional mega-homes like Malibu, Bel Air, or Beverly Hills costing over $20 million, the list of possible purchasers is limited, and the majority are already known to the brokers, making an off-market The deal is more enticing.
According to Carswell, this makes broker ties even more crucial, particularly among the rich.
"Never before has the need for a skilled, connected real estate professional been more valuable, especially at the high end," he stated.
However, other brokers claim that even for expensive houses, sellers who go private may not receive the best price since they limit their pool of possible purchasers.
"They're leaving money on the table," said Noble Black, a Douglas Elliman broker. "There is a solid justification for not listing; you prefer privacy and discretion. "But you're paying a premium for that."
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