Appraising and Selling Fine Wine
When a wine collector is pondering his or her collection, it is sometimes difficult to decide just what to do with the wine. It is often best to take a moment to formulate goals before moving forward. Whether to have a collection appraised or to proceed directly to bringing the collection to market is the fundamental choice. Here is an overview of each activity.
It is important to understand that a valuation is not just numbers pulled off the internet. As it is being created, these figures are first adjusted by taking into account market trends and then by averaging different sales as necessary–or sometimes using retail data–to obtain a credible result. It’s necessary to know what is an anomalous result and then be able to see the trend line past that anomalous result.
The second part of the art of appraising is to have knowledge of particular sales. For example, a sale directly from the cellars of a particular winery can command a premium, as can a notable single-owner sale. It’s necessary to take these into account in order to arrive at something that is reasonable (i.e. a credible result).
The final piece of the puzzle is that it is necessary to understand the provenance of the property being appraised and the market trends at the time of the appraisal in order to arrive at a real number. Other things can also condition the idea of value: it can be important to take together all of the items in a group (i.e. they may be worth more if sold together, or a collection can be worth much less if the top bottles are stripped out). One must also consider the concept of a “blockage discount”: the market can “choke” on too much property of the same type. At the end of the day, appraising is a process that is based in science and is very research-heavy but it is necessary to interpret the results as well.
Appraisals are billed as an hourly rate or as a project fee, as it is forbidden by the Appraiser’s Association code of conduct to accept a fee based on a percentage of value.
It is sometimes preferable to proceed directly to market. Here both the services rendered and the fee structure are both quite different. Here is a look at each stage of the process.
The first task is to solicit offers for a collection. Once a list has been established we engage with all of the parties that might be interested in taking it to market. This means principally auction houses, but it also typically includes brokers, merchants and even private collectors who would be interested and able to make a one-time cash purchase of the collection. Offers are solicited from each of these interested parties and negotiations undertaken to obtain the best possible offer.
The second step is to prepare a report and help the collector evaluate the offers. Auction houses, brokers, merchants and private clients all work slightly differently, and we help the collector compare the advantages and disadvantages of each offer. Once the collector has chosen someone to bring the collection to market, terms and conditions of sale are negotiated on their behalf.
Once the contract is signed, we follow the sale throughout the entire process. In an auction situation, this means working with the auctioneer to ensure that the sale is marketed correctly, and we remain on hand to assist with any questions about settlement of funds.
One key difference is that the collector does not pay for our wine collection brokering services, as we paid an introductory commission by the auction house that represents the wine (typically 4% of the total); a similar fee is negotiated from brokers or merchants should they put forth the most interesting offer.