What happens to collectons?

[Peter Bleed]

I happen to be a "collector" and I am also interested in how collections get both formed and dispersed. I happen to have what I supposed can be described as a "collection". For all of those reasons, I would like to know what the Japanese sword community is observing about the dispersion of Japanese sword collections. How are established collections being dispersed? What strategies are effective for individual and heirs who are getting rid of collections? Have we seen "good" or "bad" means of breaking up collections? Do dealers prefer dealing with "collections" or or with specific pieces within them? What is fair when dealing with groups of things? .

Peter

[Lewis B]

Good question. I'm also curious, especially for higher end blades. 

[Mark]

Paul D collection (or much of it) sold at auction, and those that did not sell were/are available through a dealer here

 

A large collection from northwest was sold through a well know dealer (he may have some still available)

 

i am not sure of the results but there are some examples that could be looked at 

[cluckdaddy76]

Excellent question that has floated through my mind too. My daughter will be my heir, and I would like to give her as much help as possible. Another question I have is once you have enough pieces to be considered a collection, should a person insure the collection such as on a homeowner's policy? I looked into it loosely once and the biggest issue would be getting an appraisal value for your collection and getting the insurance agree to terms. 

[Hokke]

As someone who has dealt with sales of other types of collectables, IME they are dispersed like any other property. Some collections may be split up among several heirs, particularly if these heirs have interest in specific pieces. If none of the heirs are interested in curating the collection further, most of the time it will end in auction or sold to private entities who have made contact privately. Some collections are left to people outside the family to act as brokers, selling the items and depositing the sales into a trust, minus a commission. Once all the items have been sold, the revenue from the collection is dispersed equally amongst those specifically named. Lastly, we have collections that are passed to individuals who do intend to keep them as heirlooms and they are never seen until *that* person expires and the cycle starts all over again. Autos, arms, firearms, jewelry, art, real estate........all the same

[Bruce Pennington]

We all just got to witness the selling of the Plimpton collection.  A few of our guys got to help disperse large chunks, but I don't remember who the primary guy was that seemed involved in the beginning.

 

Mine, when I get hit with the proverbial truck, goes to wife, then daughter, neither of which is interested in them.  So, I've made a notebook with the basics about each sword and have listed the contact info of a couple of guys they can reach out to if the want to sell them off.

[Hokke]

1 hour ago, Bruce Pennington said:

We all just got to witness the selling of the Plimpton collection.  A few of our guys got to help disperse large chunks, but I don't remember who the primary guy was that seemed involved in the beginning.

 

Mine, when I get hit with the proverbial truck, goes to wife, then daughter, neither of which is interested in them.  So, I've made a notebook with the basics about each sword and have listed the contact info of a couple of guys they can reach out to if the want to sell them off.

Smart thinking on your part. So often items are left without any information either because the death is unexpected or just because the owner doesn't take the time to make notes. Then, the person dies, the heir has NO idea who to go to and what things are worth, so they sometimes unknowingly get pennies on the dollar.  Estate planning is crucial......but remember, your wishes in death are only as good as the person whom you choose to carry them out, so choose wisely. 

[atm]

4 hours ago, cluckdaddy76 said:

Another question I have is once you have enough pieces to be considered a collection, should a person insure the collection such as on a homeowner's policy?

I have my collection insured on a dedicated collectibles policy, which is cheaper for me than a homeowners insurance rider. I’ve used this program for many years, and it is nice peace of mind. Any item valued over $10,000 needs to be listed individually. Anything over $50,000 needs an appraisal. Otherwise, they insure for the value you want. Historic Firearms, Collectibles, and Sporting Arms Program

[Robert S]

2 hours ago, Bruce Pennington said:

So, I've made a notebook with the basics about each sword and have listed the contact info of a couple of guys they can reach out to if the want to sell them off.

I'm just starting to work on something similar.  My problem is that I don't even have what anyone would typify as a "collection" - focused in one area.  Instead I have a carefully curated grab bag of global current and historic arts and crafts  - many of which are exquisite examples of a specific time, place, and craft, but which would be of interest to wildly different people.  A list of descriptions and valuations will help in the case of a "hit by a bus" incident, but otherwise I'm actually planning on selling off these things before I die - probably a combination of a big "proceeds to a designated charity" type event and targeted consignment to specialist auctions.  Otherwise, I pity my executor :-)

[Hokke]

5 hours ago, cluckdaddy76 said:

Excellent question that has floated through my mind too. My daughter will be my heir, and I would like to give her as much help as possible. Another question I have is once you have enough pieces to be considered a collection, should a person insure the collection such as on a homeowner's policy? I looked into it loosely once and the biggest issue would be getting an appraisal value for your collection and getting the insurance agree to terms. 

It isn't the number of pieces you have, but the values. That said, insurance is generally for total loss. For most people this is fire or theft. If fire is a concern more than theft, gun safes can be purchased very inexpensively because fire resistance materials are relatively simple and cheap. If theft is a concern, TL and higher rated safes will give both fire and theft security. So if you live in a high crime area or like to brag to people near you about your collection, you may want to look into insurance or a TL+ safe. All that said, as Adam mentioned, insurance is easy to get and often times is relatively cheap. Just remember that your annual premium devalues your items over time. What I mean by that is, if you have a $50k item and pay $1k per year to insure it, after ten years you have $60k invested in the item, not $50k. 

Edited September 27 by Hokke

[Rawa]

1 minute ago, Hokke said:

It isn't the number of pieces you have, but the values. That said, insurance is generally for total loss. For most people this is fire or theft. If fire is a concern more than theft, gun safes can be purchased very inexpensively because fire resistance materials are relatively simple and cheap. If theft is a concern, TL and high rated safes will give both fire and theft security. So if you live in a high crime area or like to brag to people near you about your collection, you may want to look into insurance or a TL+ safe. All that said, as Adam mentioned, insurance is easy to get and often times is relatively cheap. Just remember that your annual premium devalues your items over time. What I mean by that is, if you have a $50k item and pay $1k per year to insure it, after ten years you have $60k invested in the item, not $50k. 

2% is below inflation rate in USA, it more depends if items insured are getting more value.

[Hokke]

Just now, Rawa said:

2% is below inflation rate in USA, it more depends if items insured are getting more value.

This is true, however, the inflation rate doesn't always correspond to collectables as it does to other assets. As for knowing if something will gain value......that requires a crystal ball and a gypsy

[uwe]

5 hours ago, Bruce Pennington said:

…Mine, when I get hit with the proverbial truck, goes to wife, then daughter, neither of which is interested in them.  So, I've made a notebook with the basics about each sword and have listed the contact info of a couple of guys they can reach out to if the want to sell them off.

You remembered me of something, Bruce….Thx!

[Hoshi]

Hello, 

 

The answer to this question really depends on which segment you operate in. The best strategy depends on your personal circumstances: the level of your collection, the tax policies of your country, and the family dynamics between the heirs. 

 

S Tier collection: At this level, items remain locked up post-death. Purchases are most often realized through a foundation, and items are preserved in a museum. The attrition rate on top items is driven by these types of Japanese collectors with a focus on legacy and creating persistent cultural institutions. See Sano Museum, or the more recent Token Museum of Nagoya. 

 

A tier collection: Top auction houses like Sotheby's and Christies are generally tasked with disposing of the collection (e.g., Paul Davidson, Compton collection) , but not always. Often, there are pre-agreements with the owner on the post-death sale of specific items. This is one of the only ways to access truly outstanding items, and some of the most formidable collections have been formed by placing these sort of "dibs" on items that owners would otherwise never sell. Another strategy is progressive dispersion: some owners will start trimming their collection from the bottom up early on, keeping only a few but extremely exclusive pieces for which there is ample demand, and have post-death sales or consignment agreements in place for what remains. If consigned, these truly exclusive items will be sold discreetly and without fanfare through trusted relationships with the dealer to his absolute top clients.  

 

B Tier collection: Items are usually triaged between first tier auction houses as part of a general "Samurai Art" sales and second tier auction houses for lower tier items. For example, promising items go to Bonhams, other less promising items go to Zacks. Consignments of entire collection with dealers are not uncommon here. 

 

C Tier collection: Consignments with dealers becomes the norm here. There is bargaining involved, as usually the dealers are unwilling to consign items of lower value. There can be quite some wait involved for heirs to "see the money" and this is where it becomes tempting to sell it all as a large discount for cash upfront. Partial cash and partial consignment arrangements are also possible, and should be planned ahead of time. 

 

D Tier collection: Ebay listings by family or friends, listing on the board here, and so forth.  

 

There are also major cultural differences, some of which are driven by tax policies across countries, suffice to say I won't elaborate. Family circumstances also play a major role, as sometimes heirs are distrustful of each other and auction houses act as "neutral arbiters" to pre-empt potential conflicts.

 

Hope this helps,  

 

-Hoshi 

 

 

 

 

Edited September 27 by Hoshi

[PNSSHOGUN]

The best one can hope is that treasured items go to those who appreciate them. 

[Lewis B]

37 minutes ago, PNSSHOGUN said:

The best one can hope is that treasured items go to those who appreciate them. 

Choose your executor carefully. Make sure they know what you have and the importance both historically and financially. Once that is made clear you would hope care will be taken. 

[cluckdaddy76]

15 hours ago, Robert S said:

So, I've made a notebook with the basics about each sword

 What I have done with my  tosogu is to take an index card and write down as much information as I have been able to research and leave it in each box. I have also provided a rough price for each piece on the very low end if my heir was to decide to sell all at once. I have explained to her she may get more money if she was to take her time, but when this time comes, I will leave it in her hands. All I can do is try to leave her the best guidance I can.

 

Jason

[cluckdaddy76]

15 hours ago, Hokke said:

It isn't the number of pieces you have, but the values. That said, insurance is generally for total loss. For most people this is fire or theft

This right here plus the rest of the thread has me thinking this is probably the best option for someone like me. I will get a quality gun safe that can hold the entire collection. My biggest worry is actually fire, yes theft could happen, but I pity the fool that would try. I understand now that to get my collection insured; it would need an appraisal and then it would also be the cost of the insurance. I think a proper safe is the best overall bet right now. 

[Markus]

I have done this several times in the past as a paid professional service for higher-end collections. That is, collectors were paying for the flight, two nights in a nearby hotel, with a prior discussion about number of objects and desired level of detail so that I was able to give a rough quote in advance. Pictures, and as many notes as possible taken on the ground, then compiled a folder or booklet of the collection back home, including rough estimates, comparables, etc., from past auctions and other sales, for example.

Edited September 27 by Markus

[Rivkin]

The better the items the more effort is spend by the owner to find a single buyer-collector and make the arrangements. If the collection is not only good, but specialized, there is a high chance this happening. In which case the sale often goes with a premium compared to the market price. It is a singular chance to make such acquisition and the buyer is aware of that.

 

If it does not happen, it goes either to dealer who might offer a lump sum (20-60% of the expected), or they sell over many years. Or it goes into auction. Christies and Sotheby have less problems securing good submission, but smaller auctions like Rock Island can sometimes offer exceptional incentives and have pre-arranged bidders, so they end up handling the sale.

Sometimes the sale is completely private - they send catalogue to 3-5 people, they immediately submit bids and the matter never gets into the room.

Public sales have many issues, there are always "rumors" about pieces left with nonsense descriptions on purpose, bidders who collectively agree on bids versus bidders who purposefully drive up bids on items they know will sell at some significant premium etc. etc..

 

For certain subjects, auctions are chaos few understand, but in every sale there is a lot going on.

They get strong feedback when working on the catalogue, another feedback when they see the bids.

At all times going private or splitting the collection is an option they consider.

Reasonably good collection was placed on sale and they got very high bids on items they did not think much about from a person they respected. They got really scared, pulled out half the auction, sold the stuff nobody cared much about, and offered everything else privately.

 

Edited September 27 by Rivkin

[Hokke]

2 hours ago, Markus said:

I have done this several times in the past as a paid professional service for higher-end collections. That is, collectors were paying for the flight, two nights in a nearby hotel, with a prior discussion about number of objects and desired level of detail so that I was able to give a rough quote in advance. Pictures, and as many notes as possible taken on the ground, then compiled a folder or booklet of the collection back home, including rough estimates, comparables, etc., from past auctions and other sales, for example.

Greetings Markus, im curious, do you have a flat rate per day, or do you charge per item? I imagine some items require more research than others, but if the collection is large enough, a per diem seems more logical. 

[Markus]

57 minutes ago, Hokke said:

Greetings Markus, im curious, do you have a flat rate per day, or do you charge per item? I imagine some items require more research than others, but if the collection is large enough, a per diem seems more logical. 

 

Basically, it boils down from my standard (non-translation related) consultation fee of $125/h. Has to make sense for both parties. For example, I would never dare to charge, let's say, $5k for a huge collection of objects, but which likely will only reel in $15k at the end of the day, that's not economically reasonable. It really depends on the breakdown @Hoshi posted earlier.

Edited September 27 by Markus

[Hokke]

29 minutes ago, Markus said:

 

Basically, it boils down from my standard (non-translation related) consultation fee of $125/h. Has to make sense for both parties. For example, I would never dare to charge, let's say, $5k for a huge collection of objects, but which likely will only reel in $15k at the end of the day, that's not economically reasonable. It really depends on the breakdown @Hoshi posted earlier.

I appreciate your candor, I of course was not expecting you to air your actual fees, but now that you have, $125/h seems extraordinarily reasonable in today's market for the amount of knowledge and experience you bring. Also serves to infuriate those like myself who have paid mechanics and other contractors, similar rates, for subpar knowledge and services. Such is life.....

[jawob]

I can only add that for collectors, whose families have no interest, It might not be a bad idea to handle the sales for oneself. It can be quite the burden to leave it to loved ones. While I'm only 50, and hopefully still around for awhile, I have sold off several different collections knowing that if something were to happen it would be a big drag on my family. I keep a couple items that have meaning and sell the rest, which can be just as thrilling as the hunt and study of the object. I suppose this circles back to the question of quality over quantity. Of course, large and important collections, are a different animal.

[Peter Bleed]

I hope this discussion is still worthwhile and substantive. I am SURE that the bulk of "the collections" currently in the State are residues of WWII era bring-back albeit with lots of post-War research, repair, and assessment. We will soon see the end of that era, but it is WHERE WE STILL ARE. That is the stuff that is being dispersed now. I also think that at the moment, the best market for most of the swords being sold in the US now, is the US community. 

I suppose I am also thinking about MY collection, but as I have done that I dreamed up a "dream" letter I might want to get about handling a collection. Here is rough draft of that letter.

What do you think? Could a collector find a deal who would operate like this? 

Peter

 

Dear ________,

This letter follows our conversations about your desire to disperse your collection of Japanese swords and related items. I understand the complexities of assembling and them dispersing collections. I recall interactions you and I have had over the years and I can tell you that I will try hard to help you realize a good return from your efforts and your investments. I also understand that you have decided that your collection is not suitable for dispersion in an auction. Private collections tend to be too diverse and bulky to move in a single action.

As an active and established dealer, I would aim to sell your collection – in its diversity – to the  modern collecting community. Collectors here in the US will be interested in the pieces you have assembled. There will as well be interest in Japan and worldwide. I will use my contacts with collectors and my participation in collectors’ shows as a primary venue. If you wish I will let potential buyers know of your role in building this collection. I will also handle the full diversity of the collection, recognizing that collections always include items that are less than perfect. I will not cherry pick or leave you will rough residues.  I understand that the goal is to disperse the entire collection. I will seek help you with the full range of your sword  collection, including the library and related items.

Pick up

Unless you wish to bring your collection to me, I will try to schedule a time when I can go to your home and pick up the items you wish to sell. I will try to keep travel costs as low as possible, but they will have to be covered. Collections can get bulky but I assume that your materials can be handled in domestic transport.  My expectation is that your collection will be my focus, but experience suggests that you may know of other items or collections available in your area. We will have to manage these.

Transferring your collection.

Working together, I will help you – and you heirs – make a complete and accurate list of your collection. I will expect you to select and decide what-  if anything -  you wish to keep. My understanding is that you wish to move the mass of your collection, including library sources, weapons related gear, and sword related art.

After assembling and listing the items in your collection, I can handle your collection in one of two ways. I will make a cash offer for them entire group OR  I will agree to take the group and reimburse to you as – and shortly after - I sell them. My  cash offer will be about 60%  of what I would hope will be a realized sale price. If you wish, I will reimburse you at 75% of the realized sale price, but that will, of course,  take a while

[O koumori]

Nobody has mentioned attempting to ensure that the 'new' owners employ careful stewardship and care for these historical and culturally important objects. Perhaps in this community that goes without saying. Personally I'd rather take a monetary loss, knowing that they will be properly cared for, than realize a large profit dispersing them to a hack...And I'd like to think that my heirs are of the same opinion.

just my 2 cents...

 

Dan K

[Lareon]

33 minutes ago, O koumori said:

Nobody has mentioned attempting to ensure that the 'new' owners employ careful stewardship and care for these historical and culturally important objects. Perhaps in this community that goes without saying. Personally I'd rather take a monetary loss, knowing that they will be properly cared for, than realize a large profit dispersing them to a hack...And I'd like to think that my heirs are of the same opinion.

just my 2 cents...

 

Dan K

this is my worry too, i worry that if it goes to my partner then she will not have the knowledge to get fair value but also they will go to someone chopping water bottles in their garden, so like bruce i have a document with all invoices and rough prices and who to contact.

I also put a contact or two of people who can help sell it off and that i trust.

some of my swords could hit general market and i would be fine with that, higher end i've got contacts marked against them, most of them the original owners.

I don't have enough hubris to believe i'll have left a mark on the field in any way but i will have shepharded blades through another generation unharmed or looked after.
 

[Hoshi]

Quote

My cash offer will be about 60%  of what I would hope will be a realized sale price. If you wish, I will reimburse you at 75% of the realized sale price, but that will, of course,  take a while

 

It depends on so many factors, there is not a "fair" formula that can be applied to all cases. It is a matter of supply and demand, and the IRR (internal rate of return on capital) that the dealer can generate on his investment on his predicted timeline to sale. 

 

A collection comprised of a single of one of the top 100 Tokuju blades will yield a profit with a cash upfront offer from a variety of large dealers and parties. Everyone will want it, and there is room for the dealer to sell it as a unicorn for top price. It will be the dealer's pride, and a story to be told. Auction houses will fight for it, prepare a tailored sale event via private treaty, and court you will reduced fees. Competition drives better offers. Paul Davidson's Mikazuki Kanemitsu is an example, and sold for 200 million yen+ in private treaty. You can be sure that the family was inundated by unsolicited offers, and could choose as it pleased. 

 

A disjointed chu-saku wakizashi collection, while worth on paper ~100'000$, will be so hard to move that the cash offer will be in the 10% to 20% range, at best. Nobody wants to deal with this. It's 100 descriptions to write, a 100 posts, a 1000 conversations - it is a multiyear pursuit to realize the profit of this invested capital. 

 

There is, of course, a vast continuum between these two examples.  

 

A Small but excellent thematic/specialized collection that is "more than the sum of its parts" and is a once in a lifetime opportunity for acquisition may also yield a good profit, but arrangement must be made prior. Creating such a collection is very difficult to pull-off. For example, a full set of Ko-Goto Menuki in dragon theme, beginning with Goto Yujo, with old origami accompanying each item, showing the specific evolution introduced by each master, and presented in a custom-fitted lacquer box will yield more together than each individual items, and will be sold as a complete set. 

 

At the end, try to put yourself into the shoes of the dealer, and simulate in your mind his IRR given his client base and market segment.

 

For you and the dealer, 10-15% IRR is fair dealmaking territory. 

 

Best,

 

Hoshi

 

 

Edited September 28 by Hoshi

[Hokke]

1 hour ago, O koumori said:

Nobody has mentioned attempting to ensure that the 'new' owners employ careful stewardship and care for these historical and culturally important objects......

Perhaps this is because there is no real way to ensure anything. Once you are gone, you're gone and they can do as they wish. The only thing one can do is trust in the relationships they have forged and hope you chose wisely. 

[When Necessary]

As I've stated before, I certainly don't worship these pieces of metal, beautiful though they usually are. Therefore, I cannot subscribe to the notion that I am a mere 'custodian' of objects which have some 'spiritual' value which far exceeds that of, say, old coins or paintings. I used my hard earned money to buy them, ergo, they are my personal property - thus, I can dispose of them in any way which I see fit. Future generations can amass their own collections and I feel no obligation to them whatsoever.

 

I lack any heirs and I have absolutely no intentions of allowing mammon-driven dealers get hold of my swords upon my death. Likewise, none of the blades are exalted enough to warrant display in a museum but, even if they were, most museums would simply prop them in the corner of a basement, forget all about them and ultimately let them rust and disintegrate - so they are also out as a potential repository.

 

Nonetheless, should I find an individual whom I like and respect well enough to bequeath the swords to before I die, then fair enough. If not, I have already made formal arrangements with a law firm and the friend who shall be acting as the executor of my will. Following my cremation, my ashes will be taken out to a very specific spot in the Pacific Ocean by boat and scattered overboard. These will then be followed into the deep by all my swords, plus some other, very personal, items.

 

Please spare me your outrage if you have any - as I really don't care. I am simply providing an honest response to this thread.

Edited September 29 by When Necessary