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How Do I Began Collecting Antiques As An Investment On A Budget?

Home » Antiques » Antiques: Investing » How Do I Began Collecting Antiques As An Investment On A Budget?

One way to collect on a budget is to consider items that may be antiques tomorrow, if not today. Collecting for the future is a bit of a gamble, but also an adventure. To some degree it is like betting on the market, you can never be certain, but you can be smart. But there are rules to live by.

Perhaps the first rule is to buy what is rare, not what is popular. Commemorative or collector's editions, such as an Elvis Presley doll or an official Princess Diana are not a good buy. When objects get mass-produced, they are just too common to become valuable. Rarity is the reason why diamonds are valuable and not coal. And what is rare today only becomes more rare, and more valuable, tomorrow.

The three golden rules of collecting, condition, condition and condition, also apply to antiques of tomorrow. Avoid a game or anything else if there's a piece missing, or if it's in less than mint condition. If you spend a few extra dollars today, you'll reap big rewards tomorrow.

You should also get educated by reading up on antiques and talk with dealers, most of them love to talk shop and even show off, around curious students.

You should also pursue what you like. Collectors should be passionate about their collections, whether from yesteryear or for tomorrow. If you have love baseball, collect baseball cards. If Beatles music still has a place in your soul, collect some of their early mint condition records. And if you have been a comic book junkie since childhood, look up Superman. If you're truly collecting for tomorrow, you're going to have to live with your purchases for more than a few years.

In the appraisal business, a collectible or antique actually has not one, but three values: its auction value, its retail value, and its insurance value. Many people are often unfamiliar with the differences between the three terms.

As the term suggests, an auction value is what a piece is expected to sell for at auction. It's the value that appraisers from places such as Skinner in Boston or Sotheby's in New York City usually provide verbally rather than in writing. Auction value is what a piece would usually sell for on the open market, with nobody being forced to buy or sell. But sometimes at auctions bidders vie for rare and highly desirable pieces, triggering a competitive frenzy that can drive the price of an item much higher than its expected retail value. This is why the most valuable items are often sold at auction, it's often the best way to realize maximum value for a rare object.

With more ordinary pieces, auction prices usually are lower than what they would sell for at a retail shop. An auction value is usually the closest value to wholesale. This is because an auctioned piece is only on sale for a short period of time, until the auctioneer's hammer falls, which limits the demand. Shop dealers often ask, and can get, a higher price on an object because they can put it on display for weeks and months, waiting for just the right customer to walk through the door.

The retail price is the amount an object can fetch in an antiques dealer's store. But this too can sometimes be a source of confusion. Antiques owners are often surprised when they see a dealer buy one of their pieces at auction, only to turn around and sell it at a far higher price in their store. People trying to sell their pieces sometimes don't understand why a dealer won't buy their piece at its full retail value.
Dealers can't pay full retail value because if they do that they won't make any profit when they sell it. She says the public should remember that dealers are business people, and that the vast majority of them are offering objects at retail prices the market can support.

For important antiques and collectibles, appraisers also provide what's known as an insurance value, so that the owner can replace an object if it is destroyed or stolen. Insurance values tend to be set at the top end of retail value. That is done so that those who need to replace goods lost to theft or to accident will have enough insurance money to buy an equivalent item from a dealer at current prices.

Therefore, an insurance value is based on the price you might find for an object in what the IRS defines as a reasonable time, usually not the price you might get after bargain hunting for months. Unlike retail and auction values, which are often verbal, appraisers issue insurance values as formal written appraisals. People pay for these appraisals, because they must be carefully researched and hold up to legal challenges.

You should never agree to an appraiser's taking a percentage of an object's appraised value as a fee for the appraisal service, a request that less-than-scrupulous appraisers sometimes make when providing insurance values. This practice is frowned by the American Association of Appraisers, because it provides a financial incentive for an appraiser to unnecessarily inflate his estimate of an antique's value. That higher value might be advantageous to you if your piece is lost or stolen, but higher valuations can also drive up the ongoing cost of insurance.

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