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More on Buying Good Stuff

More on Buying Good Stuff – Business of Doing Business – The Journal of Antiques and Collectibles – April 2006
By Ed Welch
My articles generate a variety of responses from readers. I receive praise, criticism, and sometimes, angry letters from dealers claiming that my articles harm the business because I give away too many trade secrets. My stock reply to all such letters is a polite “thank you.” When I am stopped in a public place such as an auction or a show like Brimfield, I listen carefully to what is said and then excuse myself with a polite, “Thank you for your comments.”
My articles are intended to cause the reader to think, take action, or question the method and nature of his or her antique businesses. As such, a given article is unlikely to please all readers.
A recent article on “Buying the Good Stuff” resulted in several letters similar to the one below. I also received two phone calls and was stopped several times at a large auction. In my opinion, the questions generated by this article deserve an answer. Below is a reprint of one of the letters. I will follow this reprint with an attempt at answering some difficult questions.

Dear Mr. Welch,
Just wanted to write and say that I think your articles on buying and selling antiques are really cool. You are a great writer! I look forward to reading your articles.
  1. How do you determine what a “really good” antique is? The “best of its kind” as you might put it. It seems that so much of what we see in the antique world today are “fads.” Things that are popular (and expensive) for the moment but not necessarily for the long term.
    How can I know that the really “great antique,” the “best” I buy today will increase in value in 10 years from now? My dad, an antique collector, has often made the same statement you did concerning the highest end antiques – that the trade in these items never diminishes and always experiences high prices. How would you define “the best?” What one person thinks is really cool – “the best” may not be of interest to other collectors. How do you specifically define these boundaries?
  2. You don’t talk much about chips, cracks, or other damage to items affecting value. You seem to indicate that these things should be avoided. However, I have seen many a collector buy items that do have flaws. I have also seen many a dealer sell non-perfect items for fair prices. Where do you draw the line? Finding items that are 100% perfect is very difficult in my opinion. All old things have some minor flaw or another if you look hard and close enough. Thanks and Best Regards,
J– P——-
Managing Director
Taiwan Consultants International Ltd.

Dear J. P,
I would like to answer your second question first. If I do a good job answering this question, most of the points in your first question will also be answered. As a dealer, I buy and sell many items that are less than perfect. I buy things that are cracked, repaired, have replaced parts, and things that have been altered. The antique marketplace is full of such items. As a dealer, I cannot afford the luxury of not dealing in such items. If I can make money selling a three-leg table, I will do so.
Last fall I had a cased amputation set that dated to the Civil War era. Two of the original tools were missing, the two large amputation knives had spots of deep rust, the amputation saw was badly rusted, the brass “U. S. Hospital” plaque was missing, and most of the small tools showed signs of much use. On a scale of 1 to 10, with 10 being the best, I would rate this set as a two. In plain English, it was a bad example of a Civil War surgical set.
Civil War surgical sets in excellent condition can sell for $10,000 or more. I offered this set for $2,600. To my horror, one of my best customers took an interest in this set and was determined to buy it. I tried for nearly an hour to talk this person out of buying this set. I pointed out the missing tools, I pointed out the rust, and I pointed out the poor condition of the small tools.
I have sold this person many high quality medical tools and sets over the years. I brought this fact to his attention. I advised him to wait until I found a Civil War surgical set in better condition. My customer did not listen to my advice. He bought the set explaining that most such sets that I offer for sale have a price tag two to three times higher.
The reason that I owned this item is that it was part of a large medical collection. The collection contained many high quality medical and dental antiques including two other Civil War era surgical sets in near mint condition.
I sold both of the good surgical sets the first day of the show. To be frank, I am disappointed that one of my best customers bought the low value set. I know he will become disappointed in it in a very short time. I was hoping to sell this set to a young collector or to a young dealer. I had it priced low enough to allow an inexperienced dealer to make a little money handling this item.
Early in my career, I was at a local auction seriously considering buying a Grandfather clock made by a famous maker. The clock was in poor condition. An older dealer, who had taken me under her wing, noticed that I was seriously inspecting this clock. “Ed” she asked, “You are not considering buying this clock, are you?” When I replied, “Yes,” she asked, “Why?” She went on to point out that the door was missing, the pendulum was missing, the hands were missing, and the face was badly damaged.
“Ed,” she said. “If you buy this clock and replace the door, the pendulum, the hands, and repair the face you will end up with a clock made by Ed Welch.” To my knowledge, there is no market for clocks made by Ed Welch. If this thing sells for $50 or less, buy it for parts and sell it for parts. Do not waste your money or time trying to fix it.”
The clock sold for $750 to a well-known dealer from Massachusetts who specializes in Grandfather clocks. I asked him why he bought this clock. His answer was short and simple, “I needed some of the parts.”
Dealers, when you buy an antique, you must buy what it is today, not what it use to be. You must pay for what it is, not what you wish it to be. If it is chipped, cracked, soiled, or damaged in any way, it is worth only 10% of the value of a similar antique that is in excellent condition.
In a hot upward bound market, damaged items sell for between 40% and 80% of the price of a similar item that is in excellent condition. In a flat or downward moving market, damaged antiques are impossible to sell.
It is acceptable for a dealer to buy and sell damaged items in an upward bound market. Pay no more than 10% of the value and try to get as close to 80% of value as possible.
It is not acceptable for a collector under any circumstances to buy a less than mint antique.
A major distinction exists between the goals and objectives of a dealer and a collector. Dealers are interested, or should be interested, in short-term gains, collectors are interested, or should be interested in long-term gains. It is impossible to mix and match dealing and collecting. Dealers and collectors who try to do so fail at both pursuits.
Now to your first question: How do you determine what a “really good” antique is? The quick answer to this question is knowledge and experience.
My current inventory is made up of sixty types of items. I have traded in several of these items for more than twenty years. My guess is that I have bought and sold hundreds of each item.
One item sold between $100 and $500, 20 years ago. That item today sells between $2,000 and $8,000. About ten years ago, I bought and sold the best example that I have ever seen. I bought this item from a collector in New York for $4,500 and sold it, within a week, to a collector in North Carolina for $8,500.
Last month a similar piece came to auction, again in New York. Because of modern technology, I did not have to go to New York to bid. I signed up to bid by computer. Unfortunately, I placed only one bid. The price soon rose too high for a dealer to pay. The hammer price was $26,000 plus a buyer’s premium of 17 percent.
Only experience gives me the ability to look at one of these antiques and make a judgment call as to value. I can do this on all the sixty items I now carry. I can do this on about another hundred items that I use to carry. However, I cannot make a judgment call on value for items that I do not deal in. It takes years for a dealer or a collector to gain the experience needed to judge value.
It takes much less time for a dealer or a collector to learn buying and selling prices. Buying and selling prices have nothing to do with value. Many antiques are commonly bought and sold for more than or less than they are worth.
The ability not to confuse trading prices with value is acquired slowly over time from experience and knowledge. One must do chopsticks before Chopin.

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