Building the great collection

Building the great collection:
     Some thoughts from someone who has helped this happen.
By James E. Lee

Great collections are built over time. It can take as long as 20 years to reach a level of completeness that lets the collector take it to the next level: competitive exhibition. As a collector travels along this path there will be several opportunities to acquire rare or unique pieces for the collection.

These opportunities must be taken very seriously since they may not repeat themselves during the life span of the collection. It should also be understood that these opportunities will most likely require a strong fi nancial commitment as well. Remember the goal is acquisition, not second place.

I intend to illustrate in this piece how to best go about acquiring these items for your collection. The first thing you need to do is define the scope of your collection. This will be your blueprint containing a list of the pieces needed to complete the collection. This step can be accomplished by studying auction catalogs to determine the population of material for your collection.

When I collected postal history of the U.S. One-Cent 1861 issue I put together a list of over 250 covers I wanted to acquire. I studied every postal history auction I could fi nd since the 1940s Knapp sales. In 20 years I was able to acquire all but 13 covers.

As a collection is being built the opportunity to acquire key pieces will emerge via private treaty or auction. On occasion you may find a key piece at a show.

There are two important strategies to employ when acquiring via private treaty. Develop a relationship with a dealer who is knowledgeable in the area that you are pursuing. An extra set of eyes in the marketplace is a must. As an example,a show dealer will see more material in a week that you will see in a year. Make sure he has a way to communicate with you from the show floor.

Next, develop a relationship with an auction agent. An agent will constantly scan  upcoming auctions for you and represent you at the sale. Believe me it is to your advantage to use an agent at auction and not place your bids on the book. You may also want to use an agent when negotiating the purchase of key pieces privately.

The relationship you build with a dealer and an agent is critical to your success. Just the savings in time will be worth their profit or fee. This person also serves as an important sounding board as your collection develops. As the relationship grows you may want to give your dealer/agent some latitude when it comes to purchasing for you at auction.

What follows is the most important part of this piece. While a collection should not be viewed as an investment vehicle, it will serve as a parking place for a lot of money over the years. Therefore, you want to position your collection to bring a maximum return when you sell. I many cases this will mean getting your original investment back.

If your collection is formed over, say, a period of 20 years you may even make money. The key to positioning is to make sure you acquire the vital pieces in your area as they come to the market. Having the means does not insure that you will wind up with the pieces. However, using an agent increases your chances. Collectors tend to undervalue key items. An agent provides guidance on value and also on what competition you might encounter at auction. This proved to be the case for one of my clients at the “Lake Shore” sale several years ago.

Without revealing the client or the item I will give you the scenario. The essay was one of the most important keys to his collection. He had been the underbidder on this item once before. During our conversation before the sale he valued the item for half what I valued it at. Once I built a case for the value that I had placed on it he agreed with me. Then I told him where I thought his competition would come from for the piece. From previous sales I knew how this other collector valued material and how he would bid.

Therefore, I added a factor of 25% to the top bid. Once my client understood all of the elements of the competition he agreed to my bid. His fi nal instructions were: “don’t come back without it”. I purchased the lot for him at about $1,000 under the top bid. This turned out to be over twice what he had originally thought the item was worth. However, he had the key piece for his collection. The alternative would have been second place. When this collection is exhibited I am sure with the proper write up it will be gold.