Antiques as an Investment: In with the Old?

Most people probably don’t associate antiques as investments, but let’s look at one example, a carved Bellamy eagle which was valued at $35,000 to $45,000 when appraised on …

Most people probably don’t associate antiques as investments, but let’s look at one example, a carved Bellamy eagle which was valued at $35,000 to $45,000 when appraised on “Antiques Road Show” in June 2005.  Within a year the value had skyrocketed to as much as $160,000. That certainly sounds like a great investment, and investors hearing of such appraisals may be seized with a sudden desire to dash to the nearest antiques dealer, but the reality is that earning returns on antiques takes dedication and extensive research. Investors should also have a genuine appreciation for antiques if they want to use them to diversify a portfolio.

Antiques do have potential as a worthwhile investment for buyers who know what they are doing, but it may prove difficult for the average investor to find and purchase so-called “investment grade” antiques. The antiques market can be a fickle creature, presenting sudden windfalls to some—such as the owner of the Bellamy eagle—or dashing the hopes and bank accounts of others.

“Usually dealers and auctioneers avoid using the terms ‘antiques’ and ‘investments’ in the same breath,” Kathleen Bailey, a certified appraiser with the International Society of Appraisers (ISA) and the Appraisers Association of America and co-owner of Baileys’ Antiques Appraisals and Estate Sale Service in Washington state, said in an e-mail interview. “Most first time buyers of antiques should recognize…the antique could depreciate as they are loading the antique in their vehicle. [They] should realize it is possible they would have to hold the item for years before a profit realized.”

That doesn’t mean that investors should steer clear of antiques. In fact, now may be the best time to buy, according to Elizabeth Dore, ISA, AM, founder of ABD Appraisers in Glendale, Ariz., and Bailey. With the economy as it is, people are selling their valuables and heirlooms to get extra money, and prices are dropping.

But, like art, experts say antiques should be purchased for passion first and financial gain second. When approached in this manner, investors who take the time to educate themselves about one or more areas of the antiques market are more likely to realize returns.

“Antiques have always been a solid investment. In many categories [they have] outperformed the stock market, but like any investment one can make mistakes [without] good knowledge,” Paul Royka, a nationally known expert and owner of Royka’s Fine Art & Antiques in Boston, said in an e-mail interview. But investors who are unfamiliar with antiques may wonder how to familiarize themselves with the market. There are many ways to approach one’s research, and gaining the necessary insights could take years.

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Antique stores, shows, auction houses and museum exhibits are a good place to start, according to Dore. She suggests seeking out a club focused on one’s chosen antiques sector, as collectors tend to share relevant information and tips.

“It’s like a support group,” she said.

Publications such as Maine Antique Digest can help investors stay on top of market trends, and websites such as Prices4Antiques.com keep a database of auction prices. Watching “Antiques Road Show” can also help investors train their eyes.

“When buyers have knowledge of what they are purchasing, they have a medium chance of a profit.  When buyers have profound knowledge of an item, they have a good chance for profit.  When buyers study for years and have expertise in a specific field of collecting, they probably will enjoy bigger profits,” Bailey said. Luck does sometimes come into the equation, she said, but investors should not count on stumbling across a valuable piece without having done their homework first.

In the past five years, there has been a significant increase in the value of American folk art, according to Royka. “American paintings have continued to rise in value, especially those by the great luminist painters of the 19th century,” he said.

Dore said that sterling silver flatware could be a good option for investors. A lot of sterling silver was melted down in the 1980s, so surviving pieces are likely to be rare and of high value—though investors should be on the lookout for fakes. She also recommends considering glass, ceramics and studio furniture.

Some items are discouraged as investments. Anything that is dubbed a “collectible” is probably a poor choice, because the value of these items can skyrocket or crash overnight, according to The Journal of Antiques and Collectibles. Royka said he recommends against purchasing anything that comes with a certificate of authenticity, as such items are typically collectibles.

“The market seeks the rare and one of a kind. Not [mass] produced things,” he said.

Antiques offer a unique opportunity for investors because they can perform double duty as an investment and a home decoration. “Many appraisers and dealers furnish their homes with antiques; they’re functional items,” Dore said. “You need furniture, so why not use appreciables rather than depreciables? A Levitz couch is a depreciable, but an antique sofa can be reupholstered or an antique coffee table can be a beautiful piece in your home and can hold its value. Your household furnishings can be an investment.”

But when keeping investment grade antiques in the home, investors need to take some precautions. Special care and cleaning is likely to be required, and there are many books on these subjects that can be used for reference. Possibly the most important thing is insurance. Valuable antiques must be specifically insured, rather than simply included as part of a general home insurance policy, if investors want to receive the item’s full value should the worst occur. Typically insurance companies will require appraisals of the items in question to confirm the value. A certified appraiser can provide the necessary legal documents.

Antiques have the potential to provide impressive returns for those who truly love them and are willing to put in the time and effort required to learn the ins and outs of the market. Ultimately, antiques are a lifestyle investment.

“Collectors know who they are and understand how important it is for them to visit museums, auctions, antique stores, antique shows, estate sales, etc. Collectors know from studying their specialty how to make a profit on an antique,” Bailey said. “There is so much more to collecting than the money one would hope to gain on a purchase.”

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