Acquiring in the Dark, Selling in the Light
- By Bruce McKinney
Jefferson: An internet collector if alive today
By Bruce McKinney
The world of books, manuscripts and ephemera enters a new stage and you can tell it is life changing by the anxiety it causes. What continues to emerge is clarity on the buy-side that is as comforting to buyers as it is discomforting to sellers because it clarifies price, value and rarity. It turns buyers into negotiators and introduces skepticism into relationships that have long been characterized by trust. As a consequence dealers increasingly encounter buyers who know not just the material but its pricing history and expect to acquire it within a logical price range consistent with condition. Such an approach is essential for the collector who pursues a passion and wishes, if not expects, their collection[s] to make economic sense - if not by comparison to stock market investing, at least as a repository of value that can eventually return to the market or be gifted for its tax benefit. Of course, if such purchases are financially unimportant, the acquirer may all but ignore references to fair or appropriate valuation. Most committed collectors however do not intend to waste money, nor do they have unlimited resources, so the emergence of valuation tools significantly alters collector attitude about price. The significance of this change is increased by the steep decline in prices since the 4th quarter of 2008.
Because prices, at auction, for books, manuscripts and ephemera have generally fallen by a third over the past sixteen months the scale of negotiation has moved from the "gentleman's 10%" into the realm of the traditional dealer discount: 20% and beyond. The difference is substantial though there are no rules about it and often no easy way to tell who is discounting, and how much.
The challenge to know who and what is negotiable is significant because perhaps 10% of dealer material has already been reduced, in some cases substantially, while most other dealers have held firm, believing their prices may be possibly high but only when judged in the short term. Even then, among those reducing prices, these reductions are not typically uniform. In other words some inventory may be negotiable while other material is not. As well, for some dealers, their costs may be uncomfortably close to current valuation and this affects their willingness to negotiate. From the acquirer's perspective a seller's cost is irrelevant but it's important to dealers, many of whom refuse to take losses irrespective of current valuation. This creates a mine field for buyers and a dilemma for dealers. What is appropriately priced? Dealers resolve this to some extent with negotiation.
These days the coded language to establish the scale of negotiation is "would you consider an offer?" That's the open door to larger discounts. If a dealer has already reduced their prices they'll explain their position immediately. If they have not they may be willing to talk. While the market is down this approach will be both common and effective. When dealers sense the market is recovering the range of negotiation will narrow.
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Acquiring in the Dark, Selling in the Light
- By Bruce McKinney
Eames: An internet collector if alive today
The best way, in any event, to deal with changing valuation is to look at auction realizations for the past year or so and then add 20%. Bear in mind that in a normal market, and this market will be normal again, dealer relationships [for advice and access] are important. They aren't just sources of material. Experienced dealers provide perspective and few meaningful collections are built without help.
It's also important to understand that the downturn does not affect all material in the same way. The best material [as in condition, rarity and appeal] will decline relatively little, perhaps 5% to 15% while more common material with condition issues may fall 50%. It's also necessary to appreciate that sellers may be slow to acknowledge price declines so its logical, may I say necessary, to confirm recent auction realizations for anything over $300. You can look on the listing sites for free for asking prices but they tend to be high. Auctions are the cash market. As well, if an item frequently comes up at auction you can use the AE global search to look for it in all upcoming sales.
But now having made the case for auction records as the arbiters of price when prices are declining, let me also say that many dealers, over their careers, develop a keen sense of condition and focus on the best copies while avoiding lesser examples. To the layman two copies may look similar but one be a steak and the other a Big Mac. The difference in price can be several times and yet the best copy is almost always the better buy. When in doubt always ask questions and if uncertain, wait. Your understanding of quality will be crucial to your collecting experience and it takes some time to develop.
Coins are graded on a points scale. Books are far more subjective. If you don't yet understand condition you will invariably buy indifferent material that fools the amateur but is transparent to the professional. Buy too much of such material and you'll become afraid to sell it at auction for fear of being humiliated, one reason so much material is offered anonymously at auction or disposed of only after the collector is beyond hearing, knowing and feeling Understand condition early on or select a category, at least initially, that is not condition dependent. When you someday exit the collecting experience, if you have been tough about condition, you will do fine. This is the challenge.
All this said, the recent decline in prices presents, I believe, an unusual opportunity for collecting. We have probably rolled back prices a dozen years and now know much more about day-to-day availability and relative condition than we knew back then. Millions of items are continuously accessible in single searches and tens of thousands posted fresh every day. As well, the scale of material available makes intensive narrow collecting a possibility for the first time. In fact there has not been a comparable collecting opportunity since the 1950s.
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Acquiring in the Dark, Selling in the Light
- By Bruce McKinney
Huntington: an internet collector if alive today
Together three aspects of collecting have changed. Prices have declined but most listings do not yet reflect the change. Much more material is available and easily accessible online. And, the AED provides a quick picture of transactions that immediately provide both market value and frequency of appearance.
This said, the battlements are not going to be stormed. Collectors do not arrive by the busload. The great collectors arrive one by one, their antenna adjusting, their voices modulating, their brains calculating. Even as we speak there are Streeters afoot although their names, orientations and accents are different. They arrive at a great moment in book collecting and will feast for a generation on both the material and the changing methodology. Are you one? You are alive at the right moment? Be alive to the possibilities.
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