The Collector/Dealer – Business of Doing Business – The Journal of Antiques and Collectibles – August 2004
By Ed Welch
The collector/dealer has the greatest chance of becoming wealthy amassing and then selling a collection. Many people play around with the notion of being a collector/dealer. In reality, only a few people have the patience, dedication, and money necessary to succeed.
Being a collector/dealer is not for the timid, it is not for the uneducated, and it is not for people who do not have a substantial amount of surplus money. True collector/dealers do not sell anything that they purchase, even their mistakes. Everything they purchase becomes part of their collection. True collector/dealers are, in fact, collectors. The only reason they bother with a resale number is to beat state governments out of the sales tax. If you ask a collector/dealer about this, he or she will tell you that they need a sales tax certificate in order to receive the 10 percent discount normally given to dealers. In reality, this courtesy 10 percent discount is given to anyone who asks for it.
When I entered the antique trade in the early 1960s, I fancied myself a collector/dealer. I specialized in antique firearms. I bought the very best firearms that I could afford and I bought firearms of a lesser value to resell. My reasoning was that I would buy and sell cheap guns to generate money that I could use to buy more of the best examples.
As a dealer, I have always been attracted to the very best examples of the antiques that I carry. As a firearms dealer, I owned a cased Navy revolver made and signed by “Eli Whitney, of Cotton Gin Frame”. I owned a “1 of 1000” Winchester in mint condition. I owned a Colt “Walker”. In addition, I owned several Kentucky rifles by makers such as Armstrong, and Roup, and Sylvester. In total, I had more than a hundred rare and desirable firearms. I also had nearly two hundred mid-level firearms and several hundred junk guns.
I once bought more than a hundred “Knuckle Busters”, never used, in their original boxes, from a dealer in Solon, Maine for $250. Knuckle Busters, sometimes called “Saturday Night Specials” were cheaply made pistols that literally wore out if they were fired more than a dozen times. If I were a collector/dealer, I would still own all of these Knuckle Busters. I have no idea what each one would sell for today. I do not now own a single firearm. I sold all my so-called collection before 1970, most before the gun control act of 1968. In analyzing my buying and selling habits, I realize that I was not a collector/dealer. Furthermore, I could never be a collector/dealer because I did not have enough excess money. I needed every cent I was able to earn to support my family. When I realized that I was simply a dealer, I made a business decision to do those things necessary to operate a successful antiques business.
The most profitable business technique is fast turnaround time of items purchased. This is directly opposite of the “no resale” tactic necessary to be a successful collector/dealer.
Another basic requirement for operating a successful antiques business is to buy and sell the very best and to buy and sell junk. In the antiques trade, large profits are possible only at the extremes. Collector/dealers should never buy junk.
Professional dealers should never buy antiques that they love. Doing so will likely cause the dealer to make buying decisions based on emotions. For the professional dealer, all buying decisions must be based on fact.
Everything you buy must make money for your business.
The collector/dealer is not burdened with the necessity of turning a short-term profit. The goal of a collector/dealer is to build a collection that will be worth many times its purchase price in years to come. In my opinion, a ten-year timeframe is not adequate. I believe that collector/dealers should look well into the future, at least twenty years. Thirty years, in my opinion, offers the greatest opportunity for generating wealth.
Collector/dealers must disregard today’s selling price when buying an item for their collection. They must buy only the best examples that come to the marketplace. Such antiques are always priced high. It is reasonable for a collector/dealer to pay five to ten times the going price to purchase a new item for his or her collection. Today’s buying price is not relevant to the selling price twenty or thirty years from now.
Thirty years ago I could purchase a mint Trapdoor Springfield rifle for $15. A Winchester chambered for an obsolete round could be purchased for $50. A Blue Willow soup terrain could be bought for $100. Country made Chippendale desks could be bought for less than $1,000; everyone wanted the more formal Chippendale furniture. Oak commodes sold for $12.50. Souvenir china, which I collected for years, sold for less than one dollar each. All the above prices were considered, at the time, too expensive. For example, a Trapdoor Springfield rifle could be bought for as little as $5.
I bought, at auction, four Trapdoor Springfield rifles, 1884 ramrod bayonet models, for $87. The rifles were never used and still had their factory wrappings. I resold the four rifles for $257. This was good profit at the time. Today, these rifles would be worth thousands of dollars.
I paid $21.75 for each rifle. This amount was more than 25 percent higher than the going price of $15. I sold the rifles to a collector for $64.25 each. This price was four times higher than the going price. In plain English, I paid too much to buy them and sold them for many times their value. I made $170 on this transaction. The collector will make thousands of dollars when he sells these rifles as part of his collection.
Who made the most money on this transaction? In my opinion, I have. I have reinvested my $170 profit more than 60 times generating profits with each reinvestment. The collector has not made one cent yet. The major difference in monies earned is that the collector will get all his profit in one lump sum. I took my profit in tiny pieces.
Collectors are putting money away for the future. If one believes that collecting is putting money away for the future, then the concept of the collector/dealer is not valid.
Collecting requires that a collector buy only the best examples, even if such items are overpriced. Dealers cannot buy overpriced items and hope to make a short-term profit on a regular basis. Collectors who try to be collector/dealers are wasting time, energy, and money that could be put to better use building a collection.
The line between who is a collector and who is a dealer has become blurred in the past 15 years. The line between what is an antique and what is a collectible is purposely distorted by dealers and collectors alike. The major reason for both of the above is perceived profits and prestige.
Professional dealers and professional collectors must be able to separate the facts from the hype. The best way to do this is to consider collecting and dealing as businesses. Both dealers and collectors must develop business plans. They must set goals and objectives. They must set guidelines.
Through the years, I have sold hundreds of antiques to collectors and collector/dealers. Many of my current customers are collectors. I am now of the age in which I can witness long time collectors selling their collections.
As with all human endeavors, some collectors chose more desirable antiques to collect. A good friend of mine who collected dolls and toys did extremely well when she sold her collection. Another friend sold a 25-year collection of advertising items and is now wealthy. I am anxiously waiting for the widow of a collector to whom I sold many rare firearms to sell her late husband’s collection. I believe that the collection will bring more than a million dollars.
I am convinced that professional collecting can add wealth to the collector’s estate. I am not so sure about people who try to be collector/dealers. I know collector/dealers who have assembled impressive collections. However, most collector/dealers complain that business is slow. This is not surprising. Collector/dealers tend to sell only their duplicates and their mistakes.
Such items should be hard to sell.
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