For more than 30 years, RM Auctions has been a powerhouse in the classic-car world. Now called RM Sotheby’s, the company leads the market in the business of selling top Ferraris, Porsches and other trophy cars at public auction to the highest bidder.
Since the pandemic, however, one of its strongest growth engines has been hidden from public view.
Revenue at RM Sotheby’s Private Sales division has more than quadrupled over the past four years, according to Shelby Myers, global head of Private Sales for RM Sotheby’s. Private sales, where cars are quietly brokered between buyer and seller without an auction or public price, now account for nearly a third of revenue, he said.
“We’ve definitely seen a trend where people want to transact privately,” Myers said. “Discretion today is key. People can buy without the whole world staring at them.”
The rise in private sales for classic cars is part of a transformation of high-end collectibles and real estate markets. Rather than using public listings and auctions, today’s wealthy are increasingly opting for off-market deals and listings known only to a select group of elite customers or brokers.
Last year, while combined public auction sales for Sotheby’s, Christie’s and Phillips fell by 19%, private sales increased 4% at Sotheby’s and 5% at Christie’s, totaling $2.4 billion across the two auction houses. CNBC reported earlier this year that Christie’s had sold a Mark Rothko painting for over $100 million to hedge fund billionaire Ken Griffin, even as public auctions continued to decline.
In the auction world, whether it’s art or cars or wine, private sales are more important during times of uncertainty and price volatility. Sellers don’t want to risk putting a treasured item up for auction only to have it stumble publicly on the auction block. When works fail to sell at auction, or go for well below the reserve, they are considered “burned” and become hard to resell. With social media and internet communities tracking every sale and item so closely, failed works garner even more attention.
“It’s very public now when someone loses money on a sale, and no one wants that,” Myers said. “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 like to show their cars at events and award shows are also shying away from auctions, since fans are more likely to be able to figure out how much they paid.
“The car enthusiasts used to be a relatively small, tight-knit group,” Myers said. “Now when a major collector shows their car, it spreads like wildfire over blogs and the internet. And everyone can see who the owner is and what they paid.”
Millennial and Gen Z collectors, who are just now getting into car collecting, also like the immediate gratification of private sales, Myers said. With private sales, they can buy a car today for a set price, rather than wait for an auction and possibly get outbid.
In real estate, many of the biggest deals in Manhattan, Malibu, Aspen, the Hamptons and Palm Beach are now off-market. Also known as “whisper” or “pocket” listings, off-market properties are not listed on MLS services or public websites. Instead, they’re shopped around quietly among a select group of brokers and buyers.
A townhouse in Manhattan’s Greenwich Village sold this year in an off-market deal for $72.5 million, 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 the most expensive non-waterfront homes ever sold on the island. And Aspen’s first sale over $100 million, of Patrick Dovigi’s mansion on Red Mountain to billionaires Steve Wynn and Thomas Peterffy was off-market, with the broker representing both buyers and seller.
Los Angeles is considered the birthplace of off-market deals, starting in the 1980s and 1990s when celebrities and movie stars wanted to avoid overzealous fans visiting their listed homes. Over time, according to Ernie Carswell of Douglas Elliman in Los Angeles, even the least affluent of the wealthy have joined the off-market craze.
“Even the average multi-millionaire or billionaire likes the idea of selling without the media and privacy invasion,” Carswell said.
Carswell said he currently has a billionaire client in New York who wants a special property in LA – so Carswell is looking at a mega-mansion owned by a Middle East billionaire who is only offering it to select buyers. He’s also working on a deal in Palm Springs with a celebrity who is selling a home he didn’t want shown in public to a billionaire buyer who doesn’t want any photos of his new home on the web.
“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,” Carswell said. “I blame technology.”
Off-market listings don’t make sense for properties under $5 million, he said, since they have a larger possible buying pool and benefit from broader marketing. But for special megahomes in Malibu, Bel Air or Beverly Hills priced over $20 million, the list of potential buyers is smaller, and most are already known to the brokers, which makes an off-market agreement more appealing.
That makes broker relationships even more important, especially to the wealthy, Carswell said.
“Never before has the need for a skilled, connected real estate professional been more valuable, especially at the high end,” he said.
Still, some brokers say even for pricy properties, sellers who go private don’t get the highest price since they’re limiting their pool of potential buyers.
“They’re leaving money on the table,” said Noble Black of Douglas Elliman. “There is a valid reason for not listing, you want privacy and discretion. But you’re paying a premium for that.”
