When high net worth individuals sell real estate, they often go the off-market route to maintain their privacy. But buyers seeking that same anonymity have to jump through more hoops—and spend extra time and money while doing it—to keep details about themselves and their property decisions out of the public eye, experts say.
Some buyers want to keep their identity private so it doesn’t impact price negotiations for a new property, while others want to ensure a massive purchase doesn’t negatively impact their larger business presence. But most just want to maintain their safety and security, said Jonathan Nash, a Los Angeles-based agent at Hilton & Hyland.
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"We see high-profile people whose lives are invaded so much, that when it comes to their personal life, they want to keep some privacy," he said. "They want their home to be a sanctuary."
There are some universal ways buyers typically go about maintaining their anonymity, from making decisions about the team they put in place, to deciding which properties to pursue, and how to make a purchase.
Regarding the buyer’s real estate team, finding people that can keep quiet is key, said Thomas St. John, a Los Angeles-based international business manager for sports and entertainment. "Finding a good realtor is priority No. 1," he said. "Without someone trustworthy, you won’t stand a chance."
Even with a good realtor, some clients prefer to send scouts in their place, like an assistant, business associate or family member. "I’ve sold properties to people who I thought were named Mr. Jones, but turns out, the buyer was a celebrity," said Gaby Rogers, associate director of sales at Colliers International in Sydney. Sometimes it’s not until the end of the process, Ms. Rogers continued, that the agents themselves realize who’s actually buying the property.
It’s also fairly customary that these buyers have real estate agents sign non-disclosure agreements, stipulating that they can’t share information about who their client is and how, when or for how much a deal was made. While in theory they’re enforceable, "non-disclosure agreements don’t work," Mr. St. John said. That’s because it’s nearly impossible to figure out who leaked the story or the address to the press. "We just put them in place as a deterrent," he said.
In terms of the properties, Mr. Nash said that buyers who want true anonymity should only search for pocket listings, with absolutely no marketing, social media or paper trail behind them, whose presence is only spread—"very hush hush"—through word of mouth.
If a buyer decides to purchase property with their name attached, their anonymity is pretty much gone, experts say, as everything becomes part of the public record in most countries, including Britain, the U.S. and Australia, where six weeks after a property is bought, details must be registered with the deed’s office, according to Ms. Rogers, who lives and works in Australia. "It’s very straightforward in this country," she added. "There are no secrets."
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If a buyer wants to instead make the purchase through a company structure, there are a couple of options, all of them best handled by business managers, real estate attorneys, international tax attorneys, accountants and other professionals, who are there to make sure that everything is legal, and in the best financial interests of their client.
The first option is to buy through a Limited Liability Company, or LLC, and the second is to purchase through a revocable or living trust, said Gail V. Phillips, a real estate and business law attorney in Beverly Hills.
"Using one of these methods ensures that the buyer is not front and center when you’re looking at tax rolls and accessor rolls and such," Ms. Phillips said. And if, for instance, the LLC is formed in Delaware, where both Ms. Phillips and Mr. St. John said they prefer to start companies, or another asset protection state, like Wyoming, the members’ names don’t go on the public record either.
Using these methods isn’t just about anonymity, though. "The goal most often is to provide a degree of asset protection," Ms. Phillips said. That might mean limiting liability or making decisions for estate-planning purposes—sometimes both, in which a trust is a member of the LLC, which provides protections, plus anonymity. "You’re putting in layers, so that someone will have to sift through all of this before they get to the buyer."
There’s no way to keep true anonymity anymore though, experts say, especially in the U.S., where since March 2015, the Treasury Department has required more transparency on all-cash purchases made by shell companies in Manhattan and Miami on properties that cost more than $3 million and $1 million, respectively. In August, they expanded the scope of this program to all of the New York City boroughs, as well as an larger region near Miami and counties in California and Texas.
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The good news? "The government is looking for people living offshore, making huge all-cash purchases within the states, who are either laundering money or trying to evade paying their fair share of taxes," said Seth Kaplowitz, a professor of finance and management at San Diego State University. "They’re not looking for someone who just wants to remain private."
Vancouver’s Sales Slump Drags Down Numbers For All of British ColumbiaAfter strict new regulations aimed at slowing the city’s skyrocketing price hikes, Vancouver sales transactions took a steep drop in October, and have brought numbers for the entire British Columbia region down with them. A new report from the British Columbia Real Estate Association indicates that B.C. sales transactions in October dropped 16.7% year-over-year, with a total volume of $4.4 billion, a 24.2% year-over-year drop. Meanwhile, transactions in Vancouver dropped to a 31.4% share of the market, compared to 42.6% the previous year. (Vancouver Sun)
High-End Buyers Now Prefer Even A Bathroom With a View Consider this an option best-suited for apartments on higher floors: Luxury new development buyers are gravitating towards bathrooms with not just a perfunctory window, but with an expansive view of the city below. As interior designer Clodagh put it, "You spend eight or 10 hours in there a week, and it’s one of the places where you can refresh, renew, and get natural light." Part of a larger industry focus on luxurious bathroom amenities, bathrooms with large— and even wall-to-wall windows— can be found in high profile projects in New York such as 432 Park Avenue, Walker Tower, and 100 11th Avenue. (Bloomberg)
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Office-to-Home Conversions are Bolstering England’s Housing StockA wave of commercial properties converted into residential housing has led to a surge in England’s housing stock, though numbers still fall short of a government pledge to create a "million homes by 2020." While new construction properties added 8,860 units to the market in the past year, "change of use" conversions added 30,600 new units (compared to 20,650 the previous year), 12,824 of which were former office buildings. The trend is particularly prominent in the Croydon section of South London, where outdated—and formerly empty—mid-century office blocks are being converted into apartments at a rapid clip. However, Sir Michael Lyons of the Lyons Commission, which has called for more building, cautioned, "Converting office buildings can’t go on forever, you do actually have to build new homes." (Guardian)
Abu Dhabi Landlords May Soon Need To Lower Rents Economic uncertainty and a consumer move toward cheaper units may soon mean that Abu Dhabi landlords will have to lower their asking rates, according to the most recent Abu Dhabi Property Review by real estate consultancy Asteco. Large, expensive units are particularly ripe for price chops, with rental rates for prime units having fallen 6% year-over-year in the third quarter of 2016. In the coveted Corniche area, rents dropped 9% year-over-year. The decline is narrowing the price gap between Abu Dhabi and harder-hit Dubai. "Where people are worried about job prospects, there’s a natural flight to trim your costs, so this is showing itself in the market where tenants are moving from premium locations to secondary locations that are cheaper," said Edward Carnegy of Cluttons Abu Dhabi. (Gulf News)
Chinese ‘Frenzy’ For International Properties Spreads To Smaller CitiesIn spite of government efforts to stem the flow of Chinese money into foreign property markets, the rate of investment only seems to be increasing, with an estimated $15 billion invested in international real estate in the first half of 2016. And as popular cities like Vancouver and London become prohibitively expensive and politically unfriendly, Chinese investors are branching out into smaller markets such as Houston, Orlando, and Seattle. "The Chinese have managed to accumulate very large amounts of wealth, and the opportunities to deploy that capital in their own market are somewhat restricted," says CBRE Group Inc economist Richard Barkham. Offshore real estate search engine Juwai.com estimates that Chinese holdings of global real estate will jump from $80 billion in 2015 to $220 billion by 2020. (Bloomberg)
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Australia’s Barangaroo Has Become a High-Priced Haven For Foreign Buyers A coveted corner of Sydney has become so popular with investors that a whopping 80% of its properties are now foreign owned, with Chinese buyers leading the way. "For Chinese buyers, part of the appeal is the status of living in Barangaroo," says Matt Mifsud of Raine & Horne Real Estate City Living. Another agent echoed the sentiment, saying, "My feedback from Chinese buyers is if the property is in Barangaroo, they don’t even need to visit Australia to see it, they will just buy it because of the quality." New infrastructure measures as well as James Packer’s forthcoming $2 billion casino project are adding to the allure. (news.com.au)
U.S. Homebuilder Confidence Remained Stable in November Election-related anxieties didn’t seem to shake—or spike confidence in the home building industry, with confidence ratings remaining steady for November. According to the National Association of Home Builders/Wells Fargo builder sentiment index released this week, in which a reading above 50 indicates that more builders view conditions as good than bad, the reading for the month is unchanged, at 63, and two points higher than September’s reading, which was the highest in nearly a year. "Ongoing job creation, rising incomes, and attractive mortgage rates are supporting demand in the single-family housing sector," says NAHB’s chief economist Robert Dietz. "This will help keep housing on a steady, upward glide path in the months ahead." (ABC News)