What’s an antique or piece of real estate worth? It’s not a simple answer but requires thought, knowledge, and evaluating the timing of the opportunity to attain a valuation, for both buyer and seller.
Whether it is giving one more bid at an auction or asking for concessions from the owner of the property, the valuation process should have an unencumbered flow on reaching a price conclusion. Antiques and the decorative arts are very similar to real estate in the valuation process, perhaps more so than fine arts. The look and location of piece of real estate go hand in hand with the amenities and best use function of the land. Antiques are made to function in some manner and do so with a design form that is a visual interpretation of its period. In other words, these are very tangible assets without a dependence on solely aesthetic qualities.
These “functional” tangible assets also get a valuation in a similar manner. How many chairs are available that George Washington sat in is like comparing how many buildings are available around 5th Ave. and 57th Street in New York. What is the valuation process to figure out what land next to a swamp is worth as compared to broken baseball bat? If the swamp is being developed by a builder, or the bat was broken by Babe Ruth for a home run, the values become quite different. But just as there are always examples of values for similar items, you like to think no two are exactly the same. Maybe the price similarities of homes in a new development could mirror the similarities of certain antiques that were identically reproduced, but price expectation is a dance between buyer(s) and the seller.
However the dance takes a different turn when you compare the dominant methods of how these two asset forms are sold. In terms of real estate, the broker process dominates the transaction method while auctions are truly the choice of last resort and account for mostly the lower end of the dollar value transactions. We all know that isn’t the case in the art and antiques field. So why can’t real estate duplicate the success of the auction format, and institute sham bidding and secret reserves in a fast paced sales method? My answer is to ask Sotheby’s and Christie’s. They have dominated the high end the real estate brokerage business by taking only a seller’s commission that is no grater than 6% and can be even negotiated down to 4%. They operate within the traditional norms of the real estate brokerage industry and its commission structure to facilitate a sale. Unfortunately, Sotheby’s was forced to sell their real estate division for $100 million dollars to the Cendant Corporation in 2004 to held finance their $256 million settlement for their conviction of price fixing with Christie’s.
Unless I’m missing something here, the Sotheby’s/Christie’s foray into real estate shows that they have the skill to be in the high end (residential) real estate and antiques markets. However in one format they play by the rules and in the other, they make the rules. After all, as the controlling duopoly in one of the industries, they can.