What is the value of an Item?
This is not such a simple question. As there are a few variables that one must consider. Thus I will list them out and describe each one of these variables.
- Willing Buyer – Willing Seller:
- This is the most common form of sale. You see it almost everywhere. In the supermarkets, in second-hand shops, Hardware shops, and at the flea markets.
- This is where both the buyer and seller are willing to sell the item and buy the item. There is not duress in the dealing from either party.
- Willing buyer – unwilling seller:
- This mostly occurs when a collecter sees something in a collection and the owner of that collection does not want to part with it because of sentimental reasons. For example, You hear about a fantastic record collection and the owner has been collecting for years. You see a Beatles Single that you must have. It is not in your collection and you want it bad. You know that this record exists but could never find one for years. You want it so much that you offer a ridiculously high price, but the owner will not sell. You offer more, but they still will not sell. Finally, you reach a price that the owner knows they will never get again. reluctantly they sell.
- As you can imagen this type of deal only happens with items that are rear or truly unique. Such as artwork, Limited editions of a hand made an item or a first edition book of age.
- Willing Seller – Unwilling buyer:
- This often happens when a second-hand dealer is overstocked and has no room to stoor the purchase anywhere. The item becomes undervalued and unwanted. The seller wants it moved on for whatever reason, they are moving town and do not want to take it with them, or whatever the reason. The same occurs when the items go to Auction and no-one bids on the item. The Auctioneer then will drastically devalue the item at the next auction.
- This is sad for the seller because they know they are losing money by selling a perfectly good item.
- Insurance Valuation:
- When you have an item that needs to be valued for insurance purposes, the valuation is often inflated. This increases your premiums as well. But the primary reason is that the item you have to insure is a rear hard to get thing. This is where the valuer needs to do a lot of research. Scouting Auction houses and antique shops or specialty boutique shops are needed. Carters Antique Guide has done a lot of this work and that is why they charge so much for the information they are selling. Auction price will give you a market value but for insurance, you cannot regularly buy the same item. Thus you will need to buy a similar item from a special place and then transport it home. Hence insurance value is not a real value that you can sell your item for, a dealer will just laugh at you if you insist that the insurance value is what you want to sell the item for. Others that are not in the know may accept that value as a real value.
- Market Value – Auction:
- This is the real value that an item gets on the open market with a willing seller and many willing buyers. This is the arena where dealers and private people can complete together for the items on offer. The winning bidder can be assured that they can at least get their money back when trying to sell the item on. The general rule what I use is one-third of retail value is market value. But not always the case, and dealers will not even pay that. Why? because of the value of the item does depend on supply and demand. Why buy an item that is already saturated in the market place.
- Do Not Think eBay is market value. The prices you see on eBay are only what people want to sell the item for. If you see an item with more than one bid on it and watch it till the eBay auction ends. Then that is the market value. But be warned, The item is being marketed around the world and some items are worth more in some places and not in others. This is because there may be a fad or something is in fashion. But on the other hand, you will see collectors competing to get the same item. Thus this may inflate the items market value because collectors will always pay more than dealers will.
- Rare – Supply & Demand:
- Supply is indicating the number of items that are on offer. While demand refers to how much people want that item. If the item is Rare then there are not that many of that item in existence. For example, a limited edition lithograph signed by the artist.
- So if you are old enough that you can remember that items such as RC Aircrafts, Diamonds and Glomesh were once very expensive. So now you look at drones and other RC toys have come down in price to the point that it may only be worth an hour’s worth of work. Likewise, people are starting to realize that Diamonds are more common that what they were told in the past. While many people do not even know what Glomesh is nowadays. Thus we can see that the price of production has come down and the supply becomes abundant, with competing companies selling the same types of items which brings the price down. However, if an item becomes rare or in threat of becoming rare then the price will skyrocket because supply lessens but the demand increases. For example; I recall as a child there were reports of a really bad storm hitting Brazill and there was a threat that Coffee was going to soon run out in the world stock. Overnight the price of coffee increased and everyone was fighting at the shops to buy what was left on the shelf.