Making Collectibles More Investableby
The prices of stocks and bonds update many times a second. Will Seippel, the founder of the website WorthPoint, says it should be almost as easy to get a fair price on your antique or collectible.
He has quite a challenge ahead of him, say experts on the market for collectibles, which can include any object that has some resale value—from ancient coins to 19th century furniture to vintage Led Zeppelin T-shirts. Almost everyone owns collectibles, but very few people know how to determine their value. In a market this large, inefficient, and opaque, "it's very difficult to know when you're getting a fair price on something," says Christopher Didier, a managing director at Robert W. Baird's family wealth-management group.
Seippel tells a story of a jeweler offering his mother $25 for a gold coin that he knew contained about $250 in gold. Technology can help avoid these situations, he says. A "better armed" collector "is going to do better," he says.
For subscriptions costing $10 to $50 per month, WorthPoint allows users to gauge the value of their own collectibles—or collectibles they want to buy—by searching through sales records of similar items. For each item, ranging from baseball cards to classic cars, users can see photos, descriptions, prices paid, and where and when they were sold. So far, the WorthPoint database contains records of 73 millions items bought and sold, and it adds 3 million to 5 million each month.
Opposite of Snooty
Unlike more established sites aimed at appraisers or dealers, WorthPoint is aimed at the general public. It focuses on "stuff that the everyday person would have in [his] house," Seippel says. "There are great people in our industry, [but] you can get screwed. My goal is to make this more transparent [and] more fun."
To make the site more entertaining to browsers, WorthPoint spotlights interesting items in its database, like a 1916 quarter-dollar coin sold at auction in 2006 for $18,400, or a 1957 Mickey Mantle baseball card sold on eBay for $152.50 in 2007. The site's "worthologists"—experts on particular types of collectibles—write articles on such topics as circus memorabilia or Chinese porcelain.
WorthPoint, which was launched in 2007, is seeing a surge in traffic as it adds more data. According to comScore, the site received 2.76 million unique visitors in December 2010, more than three times its traffic a year earlier. WorthPoint says it has boosted its number of paid subscribers 40 percent since October, to 14,000.
How Used is "Used"
Some are skeptical. Novice collectors should know there are important pieces of information that no website can provide, says Elizabeth Stewart, an appraiser in Santa Barbara, Calif., with 26 years of experience. Although Stewart is a WorthPoint subscriber who uses Web research as a starting point in appraisals, she says collectors need an eye for subtleties such as condition—which is not always apparent in an online photo—or a knowledge of the tastes of the top collectors of each kind of item. "Each category of collectibles has its own wildcard," she says. "Really great collectors live, eat, and breathe their material."
One prominent competitor in antiques and collectibles is a company called Prices4Antiques, while several other well-established sites tackle the art market. All the sites compile photos, descriptions, and other data from auctions or other sales, allowing collectors, appraisers, and dealers to check on values by looking up the transactions of similar items. The art market is on its way to being more of a "valid asset class," says George Collins, president and chief executive of the website AskART.com. "Years ago, the art market was jump ball," with the outcome of each transaction unpredictable, he says. "Now there's a lot more confidence in taking action." Collins notes that art is widely studied in universities, and works can be categorized by artist and style, while collectibles are a market of almost infinite variety and much more difficult to organize.
WorthPoint's data come from auctions, dealers, and especially the online auction service eBay. Through a deal with eBay, WorthPoint collects the records of all the site's completed transactions, which make up about 80 percent of WorthPoint's records. Seippel plans to add better search tools, information from reference books on popular collectible categories, a mobile-phone application, and photos of "makers' marks," the small clues on pottery, silver, and other collectibles to their origin. "We have a long way to go," he says.
Higher up the Ladder
WorthPoint's "big data" approach to collectibles contrasts with Prices4Antiques, founded in 1999. In contrast to WorthPoint's 73 million records, Prices4Antiques contains less than 600,000 records, with about 6,000 added each month. Rather than collect every record it can find, Prices4Antiques founder Kent Anderson says every record is created and reviewed by one of the site's seven expert editors, making it is a more authoritative site with consistent records that are easier to search and contain less "junk." "It makes the data much, much more useful and reliable," he says. With 2,800 subscribers paying $45 to $79 per month, Prices4Antiques has a narrower audience of mostly appraisers.
Seippel defends WorthPoint's inclusion of a broad array of data. "We have low-end, and we have high-end," he says, a range that is appropriate for amateurs trying to value the items in their homes.
Better use of the Internet has the potential to attract more investors to collectibles. "The more transparency you have in this marketplace, the broader you can make the market," says Baird's Didier, who helps families manage their wealth, which often includes valuable collections. That's something many market participants say they favor. Then again, Didier says, "there is also an incentive to keep the market inefficient." Says Douglas Bilodeau, who has run Douglas Auctioneers in South Deerfield, Mass., for 45 years: "Inexperienced people get taken advantage of when they start selling stuff." The Federal Trade Commission issued a "consumer alert" in September 2010 warning consumers about getting taken advantage of in the collectible-coin market.
Beware the Hidden Costs
A public auction can be a reliable determiner of value, Bilodeau says, but buyer preferences can change quickly. Certain kinds of collectibles "go in and out like the wind," he says.
Beyond the possibility of fraud or not getting a fair price, there are several other reasons why the general public might not want to think of collectibles as investments, Didier says. Buyers of collectibles must pay sales tax, insurance, appraisers, high commissions, and the costs to ship and store their collectibles. Transaction costs and fees are an issue for any investment, but the many hidden costs associated with collectibles can turn profitable antiques into money losers without collectors realizing it, he says.
"There's nothing wrong with buying a piece of art, a coin, or bottle of wine just because it inspires you," says Didier. "But if you're looking at something [with] a profit motive, it's imperative you get expertise." Collins, of the AskART.com site, agrees. "There is no substitute for turning to a professional," he says. "Online is still a little bit amateur hour."