Antique valuation

Factual Questions
1

I’ve been watching episodes of Antiques Roadshow and I’ve noticed that it’s fairly common for the appraiser to say something like “This item does have some condition issues. In its current condition it’s worth X. But if you spend Y to have it restored, it would then be worth Z.” Where Z is quite a bit more than the sum X+Y.

I don’t understand how it’s possible for all these statements to be true. If it’s really true that anyone could buy this thing, have it restored, sell it, and turn a profit, then how could its current value be so low? At an auction, everyone (presumably) knows that the thing is actually worth Z-Y, not X, so why wouldn’t the bidding rise to the restored value minus the cost of restoration?

My only guess is that despite the appraiser’s apparent assuredness in his estimate, there’s a certain amount of uncertainty in how the restoration will come out, so when the appraiser says it will eventually be worth Z, that’s a less certain estimate than his estimate X of the current value when he can actually see the condition. Is that the issue, or is there something else I’m not thinking of?

2

The key word here is “estimate”. The valuer can usually make a good guess at the current value of an object in good condition based on what they have seen going through auctions, but then they “estimate” how much value is lost due to the damage, and then make an educated guess at the restoration cost. This last will vary wildly depending on where the owner takes it, the quality of the restoration/repair, and whether the ‘repaired’ object will get anywhere near the value of a pristine, undamaged item.

You might ask the same of house-flippers. They buy beat-up houses, spend money on them and then sell them on, often at considerable profit to people who could easily have done it for themselves, but choose not to. The antique market is far more variable than the housing market and those valuers are most definitely not liable for any errors they might make.

3

There are a couple a factors to consider.

First, for some items and some types of restorations of said items, even finding a qualified and experienced restorer can be a challenge. How much time, effort and money are you willing to expend on that search? Do you know where to get that 18th century flintlock restored and can you spot a skilled restorer from a schmuck with a wire brush? That need for a search adds time and uncertainty that many people have no interest in facing.

Second, the person from Antiques Roadshow might not have any real clue what they’re talking about. They may sound impressive but does that mean they have actual knowledge of the subject. I wouldn’t know.

4

There are three different and only broadly related values antiques people would use, and all of them get used without clear distinction on Antiques Roadshow type programs:

Insurance value - this can really be anything you want it to be, as long as the insurer accepts the cover and you can keep up payments. It should reflect the cost to you of loss, which is usually taken as buying a replacement for your antique Georgian DVD player, which may or may not be easy in itself, and associated expenses and costs, plus covering any emotional loss you may felt.

Retail or sale value - what an antique shop or dealer would sell it for. Their cost for buying something plus their margins. This is usually determined by keeping the price low to get it out the door quickly, because the alternative is that it sits there wasting space for 15 years before a broken tap floods your store and ruins it.

Buying price - what they would pay somebody who turns up at their shop wanting to sell their genuine piece of French provincial tat. Ideally zero, but something like a third to half of sale price.

Auction price can be unpredictable, and two cashed-up idiots can break records by losing control of their bidding, but someone smart should be trying to get out before they reach retail buying price, or otherwise why bother with the auction at all.

For an item that is not in good condition, potential restoration costs will figure into each of these calculations but all three types of pricing are strongly influenced by other factors than your X and Y.

A bad restoration will actually drop the price, especially when your art gallery employs Spanish cleaning ladies to help. Plus,n ot everyone wants to do restoration either. As someone who does buy this stuff I prefer paying for the original object and its patina and character of authentic age, rather than paying for a restoration that has possibly altered its appearance and lost authenticity, which you never get back once its gone.

I’m not sure how widely its been shown but there is an excellent British tv series ‘The Repair Shop’ which looks at how high quality conservation and restoration is done. In many cases there is a trade-off between the cost of the object, the sentimental value, cost of restoration and loss of authenticity.

5

That depends on your definition of ‘easily’. Keeping in mind that someone that regularly flips houses will have connections to be able to get the job done faster and cheaper than you or I. Many people don’t want to do it. Where you might be able to buy a house for 100k, put 50k into it and sell it for 200k, I, OTOH, might prefer to just pay the 200k to have a house that’s ‘ready’.

6

@ Banksiaman

Just started watching it a couple weeks ago on Netflix USA. Great show.