How the Super-Rich Buy Homes
It's not easy for a movie star, basketball player, or corporate chief to buy a house without attracting a bit of attention.
It requires ingenuity—and help from pricey lawyers—to keep the paparazzi, celebrity bloggers, and stalkers guessing. Last year movie star couple Brad Pitt and Angelina Jolie failed to hide their $3.5 million purchase of a 19th century house in New Orleans' French Quarter. News got out despite real estate records that listed the buyer as the "Mondo Bongo Trust," a reference to the Joe Strummer song, Mondo Bongo, which Brangelina danced to in the 2005 movie Mr. and Mrs. Smith.
Other stars have hidden behind trusts with such clever names as "Ingodwe Trust," "I before E Trust," "Poopie Trust," "Senior Moments Trust," and "Thank You For the Trust Trust" (used by the late actor Heath Ledger), according to Bob Goldsborough, the blogger for bigtimelistings.com who has become an expert at unmasking celebrity home transactions.
"They don't want people to be able to find them," Goldsborough says. "It drives them nuts when we put the name of their trust on a blog."
The super-rich also use holding companies to hide their identities and, in some cases, shelter themselves from taxes. But for many elite buyers, who live behind gates or hedges far from the street, privacy is the primary concern. They require real estate agents to sign confidentiality agreements and arrange for private showings during which the owners and all household staff are absent.
Some wealthy buyers do their research on the Internet. They can view photos, videos, and floor plans, and decide without even visiting the home, says Laurie Moore-Moore, founder and CEO of the Dallas-based Institute for Luxury Home Marketing. According to her, a house listed for $100 million kept the most sensitive information such as floor plans and specific inside views hidden on a password-protected site. The passwords were given only to pre-qualified billionaires.
Moore-Moore also reveals that a property of this type often has a three-tiered marketing program. A casual inquirer would get a two-sided brochure with exterior photographs and a little more information on a Web site. A luxury agent with a top client would get a 16-page brochure with exterior views and a few carefully chosen interior shots (with haiku poetry alongside each photograph). Only a fully qualified client would have access to the password-protected Web site with floor plans, information about the heating and air-conditioning systems, and interior photos and videos, she says.
Regardless of the house, the buyer might be invisible throughout most of the transaction process. "Screeners" sometimes visit an estate and conduct negotiations on behalf of celebrities or high-income buyers who don't want their fame to influence the sales price. "If Madonna suddenly expresses interest in buying your house, you might say, 'Well she can afford it, I'm not going to be negotiable,'" Moore-Moore says.
Some wealthy sellers also like discretion, especially if they're going through a divorce, illness, bankruptcy, or some other personal crisis that they'd rather not draw attention to. In some cases, the agent is told not to place the home on the multiple listing service or even to advertise it. The agent might suggest selling the house without a traditional marketing campaign.
A well-connected agent can find a buyer by calling another luxury agent or wealthy client interested in a great off-market listing with unique characteristics.
"Lots of really good stuff, you don't even need to put on the market," says Christopher Hain, real estate agent with Hollywood Hills (Calif.)-based Ramsey-Shilling. "Agents facilitate the deal because it allows them to do both ends of the deal."
But most clients selling expensive homes are happy to have a strong marketing campaign. Their agents might set up a booth with brochures at an air show or boat show and put an advertisement on the Internet, in The Wall Street Journal, The New York Times, European publications, and niche magazines such as Unique Homes, Moore-Moore says.
"The more expensive a house is, the smaller the pool of potential buyers in the area," says Rick Goodwin, publisher of Unique Homes, a magazine and Internet site devoted to the luxury market. "As the price goes up so does the need to expose it outside the marketplace and outside the country."
But the advertisements frequently provide limited details. Goodwin says it's common for ads for expensive properties to say "price upon request." The owner of a house on the market in Beverly Hills asked that the name of the property be digitally removed from a photograph appearing in the magazine; the name was displayed on the welcome mat in front of the house, Goodwin says.
"Some people may not want to make a big deal about it," Goodwin says. "They might think, 'I don't want the fact that I'm selling my house to be a big item in the newspaper.'"
Business Exchange related topics:Housing MarketLuxury Real EstateLuxury RetailingManhattan Real EstateTax ReductioneCommerce