Originally posted on the hobbyDB Blog here
What does Collecting have in common with getting married?
Most collectors collect for collecting’s sake and this will only make sense to a collector. For me, preserving history and relaxation are part and parcel of this same collecting rationale. Collectors rarely (if ever) think about what happens when the love cools and how they will then have to sell everything.
Consider that your collection might not be with you forever
While there are ways to make this sell-off significantly easier, it is like prenuptial agreements – something most don’t want to touch. This blog post tackles why collectors sell, how to go about it and how to best prepare for an eventual sale.
Like the 40-50% of spouses who eventually head for the divorce court, the vast majority of collectors eventually fall out of love with their collections. How long it takes that to happen depends on the type of collectible. For example, pocket watch collectors keep collecting longer than collectors of newer things like Funko Pop Vinyls. On average, the latter will collect for around four years, while collectors of more vintage subjects like Decoys collect for 18 years.
Until becoming a vintage item himself, Bubo will live in five times as many households as his unhappy neighbor!
Why do collectors stop collecting?
There are five main reasons why folks stop collecting and then want to liquidate and recoup the value of their collection:
Realizing full value for a collection requires both expertise, motivation and time. The reason for selling can have a major influence on how a collection can be sold. For example death often takes the necessary expertise with it.
How to know the value of a collection?
Collectors of vintage items will know a lot about the value of their individual items as they can only buy them in the secondary market (no retailers stock vintage uniform patches ;-). That said, a vast majority of these collectors have no clue how many items are in their collection and significantly underestimate the quantity of item they have bought over time. Often, they need to do an inventory or at least take a count or make an estimate of the number of items they own.
Collectors of more modern type of collectibles such as NASCAR racing cars often over-estimate the value of their collections as they bought at retail and modern collectibles (say everything sold in retail post 1990) generally loses 50% or more of its value as soon as you buy it.
A Bandai Tinplate car will beat a NASCAR model in value appreciation every time!
A lot of these collectors get a rude awakening when it comes to selling, as they relied on labels such as Limited Edition or Special Collector Edition, erroneously thinking that these automatically ensure the items retain value. While there might be only 500 models of a particular Jeff Gordon model there are hundreds of other Jeff Gordon models and as long as they continue to sell, more will be produced, making it very hard for any of them to ever appreciate in value. Also, as these items were produced for the collector market, most will be carefully stored in glass cabinets so there is very little rate of attrition.
When assessing a collection, there are five different types of value:
It is not unusual to value stamps by using a catalog price and then apply a discount such as “Stanley Gibbons minus 30%”
Insurance value should cover replacement costs or, if that is not possible, repair plus the value loss that results from being repaired
Auction Houses often have to sell large parts of collections as lots, here Star Wars toys.
Selling at trade fairs gives you the best value, but will take a very long time
For me the only value of interest is the Realized Value (unless you currently have an insurance claim) as its the only meaningful measure. Realized Value is either the Wholesale Value or the Retail Value after deducting all direct and indirect costs. Your calculation should also include a value for your time spent on selling the collection, for example at an estimated time-taken-per-item when you sell items online.
The various routes to Monetization
There are many different ways to sell, but they all fall into this five groups:
That’s how much you can lose. Selling everything is sometimes the only option, but it is always very painful!
Barrett-Jackson is one of the best places to sell a 2006 Ford GT
You might want to count food, hotel, fuel etc – or you might take the view that you enjoy attending the show and would have come anyway!
Sometimes you find a specialist site that is just perfect for what you want to sell
Incorporating an eventual selling plan into how you collect
Even if you are not considering selling your collection now, it’s always wise to plan what you can do now and over the coming years to make it easier for either you or your loved ones to eventually realize the value of your collection when it does come time to liquidate. If you are male (and 90% of collectors are), and in a traditional marriage, you might want to consider that your wife will be an average of 3 years younger than you and will live an average 5 years longer than you. As such, it’s an excellent idea to document your collection by making an inventory in Excel, via a video or, of course, on hobbyDB.
Musings By Joschik
Christian is one of the founders of the hobbyDB project and his musings share some of his collecting experience. Over the last 30 years, he has bought and sold more than 50 collections, owned a physical auction house and operated Europe’s largest eBay store. As part of his work with the hobbyDB Advisory Board Christian has also seen many of the largest collections of the world.
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