When making money is an art form
By David Tribe, Sun Herald, Investor Section
November 20, 2005
Enjoy your investments, David Tribe writes.
SO you own property, shares and interest-bearing securities and you're still told to diversify. The answer could be art and antiques which, unlike other investments, you can actually display in your home and make your friends jealous.
Well-chosen objects grow in value over time but, like other assets, they are subject to peaks and troughs. Every piece or class has its own cycle but general rules apply to buying and selling, as well as holding and insuring.
A GOOD BUY
Shrewd buying is paramount. Strive to get what you think you're getting, through provenance (history), certificate of authenticity, expert opinion, even physical or chemical tests. And make sure you get it at the right price.
You can well, should always control your buying, even if you can't always control your selling. The five dreaded Ds of death, disability, divorce, debt and downsizing can force a sale at any time usually the wrong time.
If you think you may have paid too much, you probably have. If you're applauded at auction, you almost certainly have.
The biggest gains come from successful punts at garage sales, fetes, street markets and opportunity shops. Commercial second-hand shops are fascinating but rarely profitable, except for books. Try diving into boxes, buying anything unusual if it's cheap, and looking for unrecognised tarnished silver, old tribal artefacts, first (or limited-edition) books and "named" artists. Unfortunately nobody pays good money for brilliant unnamed artists.
More regulated sources are dealers and auctioneers. Dealers have big mark-ups but don't think you'll always get bargains by outbidding them at auctions. They may be buying for clients on commission, not for stock. Unless you have special expertise don't pay more than the auctioneer's top estimate. And consult references such as Furphy's Australian Art Sales Digest.
If dealers aren't cheap, why patronise them? Well, they're usually happy to share their knowledge with shop browsers, are invaluable if you're building a specialist collection (the best investment) and offer a price, subject to haggling, without auction buyers' premium.
Dealers and auctioneers should give receipts containing full descriptions and approximate dates. Reputable ones reveal defects and give refunds if you can demonstrate misdescription (through expert opinion, free at national galleries).
Defects and fakes aren't always obvious to experts in photos, so prior inspection is recommended. If you use the internet, check the vendor's eBay rating and card security.
WAX ON
Having bought your treasure you have to look after it. Waxing (not varnishing) furniture, polishing silver and washing ceramics (if glazed) can work wonders. Unless you're an expert, leave the cleaning of paintings and repairs of everything to professionals. They're expensive, so decide if the piece deserves them. A botched restoration reduces value.
Works on paper, especially water colours, shouldn't be displayed on damp or sunlit walls, and may need remounting with acid-free paper. Paintings should be dusted regularly. So should books, which also benefit from an annual riffling of pages.
Wooden artefacts maintain a prized patina if dusted and handled frequently. They shouldn't be waxed, varnished or lacquered.
Copper objects need regular polishing to maintain their lustre.
Rugs are made to be walked on, but not with stiletto heels. As far as possible they should be shielded from direct sunlight.
COVER YOUR ART
Small objects can normally be kept safely uninsured in a bank vault. Items kept at home should always be insured. If specially valuable they may need separate costly insurance. Otherwise they can be included in a standard home-contents policy.
You can only get cover for unspecified valuables up to about $1000. If they're worth more you need to list each piece and show your insurer a written professional valuation (which is not cheap), indicating the full retail replacement cost.
THE BIG SELL
Selling is much more difficult than buying the big questions are when and where.
It's easier to detect a boom taking off than ending. As to where, you've got private buyers, dealers and auctioneers. You're likely to get top dollar from the first, but how to contact them? A garage sale isn't for valuables. Belonging to a specialist collectors' club helps. More often you put an ad in the paper. A stranger then turns up on your doorstep a genuine buyer or someone casing the joint? If a buyer, get cash on delivery.
Often, you have no idea what an heirloom is worth. First consult reference books and magazines. Be cautious of ads quoting prices for similar objects because they could have widely different values to your own treasure.
Auctions are usually the best outlets you might provoke a bidding frenzy. Unless you're an eager seller, agree on a reserve price with the auctioneer beforehand. Vendors' commissions are standard for each auction house for small sales and negotiable for big ones.
Above all, never accept a blanket offer for a houseful of furniture or special collection from a wandering dealer.