The Business of Doing Business in Antiques
The Best of Ed Welch
By Ed Welch
As many of you are aware, our friend Ed Welch passed away in October, 2012. His wisdom and entrepreneurial spirit will be greatly missed. At the request of many of our loyal readers we’ve decided to publish some of their favorite columns from past years.
Most people will agree that a Queen Anne table is an item of high value. Such an item would be out of place in a flea market. Not all Queen Anne tables have the same value, or even a high value. Period furniture can be compared with one another and sorted into categories: good, better, and best. (See Albert Sack’s book on grading American Furniture, Fine Points of Furniture: Early American).
Less than 10 percent of Period American furniture falls into the highest level of antiques, level 10. Most period furniture falls into the categories 9, 8, 7, and sometimes 6. The difference in dollar value between a level 7 and a level 9 antique can be tens of thousands of dollars. A dollar value difference in the hundreds of thousands of dollars is not uncommon.
I once owned a Queen Anne tavern table in original finish that I bought out of a flea market. I paid $120 for the table. I sent detailed photographs to the 2 large auction houses in New York City. Both auction houses put a value of between $25,000 and $35,000 on the table. I took the table to New York to have it evaluated first hand. I had a 10 a.m. appointment at one auction house and a 3 p.m. appointment at the second auction house.
Both auction houses found the same problem with the table. The table was original except for the bottom and back of the drawer. It seems that something had become lodged in the drawer and the only way to remove the item was to break or saw open the back and bottom of the drawer. I could clearly see the replaced drawer back and drawer bottom once it was pointed out to me. The repair was an honest repair. The workmanship was excellent. However, the table was now less than totally original.
Both auction houses no longer wanted to handle the table. Both auction houses, independent of one another, lowered the value of the table from $35,000 to between $5,000 and $7,000. I was shocked and disappointed that such a small repair lowered the value by more than 80 percent.
I tried for 2 years to sell the table for $20,000. I lowered my asking price to $15,000, then $10,000, and finally was able to sell the table for $7,500. If an item is broken, bent, cracked, chipped, or has been altered in any way; it has a value equal to 10 percent of the same item in excellent condition. In plain English, if it is not perfect, it is a piece of junk, even if it happens to be a Queen Anne tavern table.
The fact is that the repair changed the value of the table from a level 10 antique to a level 6 antique. The purchase and sale of this table taught me a valuable lesson.
In my 35-year career, I have sold a ton of junk. I love junk. I have made much money buying and selling low-end antiques. An ongoing challenge for me as a dealer is evaluating the items I intend to buy based on rarity and condition. I must set emotions aside and judge the item I am looking at based on facts. I am willing to pay good money for fine antiques, but I pay less than 10 cents on the dollar for junk.
I am friends with a flea market dealer who sells nothing with a price tag greater than $30. He is known for his supply of jackknives that have broken blades. He sells broken blade jackknives at prices between $8 and $10 each. Broken-blade jackknives have value as a cheap tool. Mechanics use them to scrape old gasket material from oil pans, farmers use them to cut bailing twine, electricians make wire strippers by filing a “U” shaped notch into the stubby blade, store owners and warehouse workers use them as box cutters. The blade stays sharp for years and can easily be re-sharpened.
This flea market dealer has taken an unwanted item and turned it into a useful tool. His policy is to pay less than one dollar for a knife with a broken blade. His cash-flow ratio is between eight and ten to one. Every dollar he spends on a broken blade knife generates $8 to $10 in sales.
Most people will agree that a broken-blade knife is a low value item. Most people will agree that a Queen Anne tavern table in original condition is a high value item. Most people will agree that a Queen Anne tavern table that has been altered, repaired, or has a replaced drawer bottom has a value less than the same item in original condition. The dollar amount that a repair lowers the value is open to debate.
The dollar value of each level of the antiques trade is not constant. Values change as new items come to the trade and the selling prices of commonly traded antiques increases. In the early 1970s, a country cupboard in original paint and in good condition was worth between $800 and $1200. Today, that same cupboard will sell between $8,000 and $12,000.
In my opinion, an $800 item belongs in level 4, an $8,000 item belongs in level 8. Most group shops and shows today operate at level 4, 5, and 6. An $800 antique will sell from a level 4 group shop or show. An $8,000 antique will not sell at full value from a level 4 group shop or show. A good country cupboard in original paint has become so expensive that most dealers cannot afford to stock this item.
In the fall of 1978, I was a level 6 dealer specializing in country furniture. At that time, I had 23 cupboards in stock. My records show that the cost of the 23 cupboards was $24,655 (around $1,000 each). The same 23 cupboards today would cost more than ($150,000).
I got out of the country furniture business beginning in 1986 when the average cost of a good cupboard rose from around $1,000 to nearly $2,000. By 1989, the cost of a good cupboard was around $3,500. An exceptional cupboard could cost as much as $10,000. This high cost placed the best cupboards in levels 8 or 9. The cost of operating an antique business in levels 8 and 9 is greater than most dealers can afford.
The average cost of items in levels 4, 5, and 6 is within the price range of most dealers. For this reason, most antique dealers today operate at the mid-levels of the antiques trade.
I hesitate to put a dollar figure on each level of the antique trade. Antiques are unlike any other commodity. Value often depends on rarity, condition, and demand. Notice that I said nothing about age. Age has nothing to do with value.
A 20-year-old collectible can be worth much more than a 2,000-year-old antique.
Each dealer must develop the skills necessary to evaluate the types of antiques he or she deals in. Without emotions and based solely on fact, the dealer must be able to look at a possible purchase and decide if the item is too low value for his or her business or if the item is too expensive for his or her business.
A level-5 dealer who buys a level-8 antique simply because, “I fell in love with it” is wasting time and money. First, a level-5 dealer has no working knowledge of the actual selling prices of level-8items. Chances are, the level-5 dealer paid too much for the item, especially if the purchase was made at auction. Also, a level-5 dealer has no appropriate selling outlet for a level-8 item.
Dealers who choose a level (price range if you prefer) and stay within it will do more business and make more sales. Their stock may not be as glamorous as that of other dealers, but they will consistently make money.