Celebrities and the wealthy find ways to keep home sales secret
Madonna is selling her Beverly Hills estate, but she doesn’t want you to know about it.
The sinewy singer is asking $28 million for the 16,500-square-foot, French-Normandy-style mansion. You won’t find it, however, on the Multiple Listing Service, Realtor.com or other online marketplaces. Her real estate agent is quietly shopping it among a select network of Los Angeles-area brokers with deep-pocket clients.
This velvet-rope tactic, known as a “pocket listing,” is being used more and more by celebrities and the wealthy in this TMZ age, say real estate agents specializing in high-end properties. Listing publicly just invites paparazzi mischief. With word-of-mouth marketing, there’s no for-sale sign on the front lawn or snoops traipsing through open houses.
Actress Meg Ryan and billionaire venture capitalist Peter Thiel are among the wide-ranging contingent that has bought or sold through pocket listings in the last year.
Also fueling the pursuit of privacy, experts say, is the change in the economy.
The well-to-do have a stronger sense of needing to protect themselves and raise the drawbridge on the details of their lives, said clinical psychologist Stephen Goldbart, the coauthor of “Affluence Intelligence.”
A recent convert to pocket listings is Randy Phillips, chief executive of concert-promotion powerhouse AEG Live, who sold a house late last year outside the MLS. The gated estate he had renovated in Beverly Hills went for $15.5 million, more than Phillips expected to get.
“It’s the only way to sell a great house,” said Phillips, who has a passion for restoring homes. “Once it’s in the MLS, it ages like bread on a shelf.”
Pocket listings have become the signature niche of Ben Bacal of Sotheby’s International Realty in the Hollywood Hills, who estimates about 70% of his business comes from such deals. He worked with Phillips on his sale and sold several other multimillion-dollar houses in Beverly Hills that way.
Bacal plans to expand his role with the launch of an exclusive agent platform for pocket listings. His website already boasts “pocket lister” in anticipation of its start in January.
“It’s a more sensible, low-key way to sell,” he said, and keep a transaction “hush-hush.”
For Matt Pernice of NW Real Estate Brokers in Manhattan Beach, pocket listings are flourishing, making up to a third of all deals in the South Bay communities of Manhattan Beach and Hermosa Beach. The beach cities are popular with professional athletes and the occasional actor because the ritzy coastal location is close to Los Angeles International Airport and the Lakers’ and Kings’ training facilities in El Segundo.
Pernice also markets the benefits of pocket listings on his website as a buying tool for finding the best homes in a low-inventory market as well as a way to create a layer of privacy.
Some sellers don’t want a sign in the ground, Pernice said. “They don’t want the neighbors to know.”
Beyond pocket listings, a traditional way for well-heeled property owners to shield their identities is to buy real estate in the name of a trust.
A trust name can be whatever the buyer wants. Pernice has seen an increase in the use of Asian trust names among celebrities, perhaps hoping to blend into the sea of international buyers in the Los Angeles housing market.
Not all stars have managed to keep a low profile. Singer Britney Spears’ use of the Love Shack Trust to buy and sell houses — including the sale this year of her Italian Renaissance-inspired villa in Studio City for $4.253 million — attracted attention because it was so specific.
“You want generic names,” said Jim Cody, managing director for estate, trust and philanthropy services at the national firm Harris myCFO. “The more general the name, the better. When you Google that name you are going to get millions of hits.”
But even mundane names can lose the cloak of invisibility. Nicolas Cage’s Hancock Park Real Estate Trust became commonly known when he lost his Bel-Air trophy home to tax problems.
In recent years, many wealthy real estate buyers have turned to limited liability companies, Cody said. That legal entity limits an owner’s liability and, like a trust, can use a fictitious name.
Sometimes even the listing agents are kept in the dark about a property’s ownership, Cody said. “The goal is the make it opaque to the outside world as to who the beneficiary is.”
But not all methods of deal hiding are on the up and up.
If a pocket listing goes nowhere and the decision is made to use the MLS, which makes a listing accessible to real estate agents and others, more than a few Los Angeles-area agents will bend or break the rules to protect a client’s privacy.
Some try to hide details by putting incomplete or inaccurate information in the listing. If they do, the agents can expect to receive a violation notice from the Combined L.A./Westside Multiple Listing Service. Repeat offenders, said Chief Executive Annie Ives, could see their MLS membership suspended.
Forbidden practices include using a phony house number, since stars’ home addresses are well known to celebrity watchers. Even though the property is not in his name, Pierce Brosnan’s 13,000-square-foot Malibu beach megalith showed up for lease this summer at $250,000 a month with zero as the street number. Jennifer Aniston’s agent put her trust-held place in Beverly Hills on the MLS with a zero street number when it first came on the market last year at $42 million.
Other tactics — such as labeling the assessor’s parcel number as “unavailable” or posting a photograph of a flower, a sleeping puppy or other unrelated subject instead of the house image — are also against listing service policies about accuracy.
“The most valuable asset of the MLS,” Ives said, “is the integrity of the data.”
Sometimes an agent will withdraw a listing or allow it to expire to hide a sale because the agent has signed a confidentially agreement with the seller. To combat that tactic, the MLS combs through housing data, cross-references and enters any missing closings and prices.
“I sympathize for the agents who have signed a confidentiality [agreement], but it’s a double-edged sword,” Ives said. “Now that everything is all over the Internet, it’s really public information.”