Author: Michael Chappell

My friend and frequent client, Los Angeles based interior designer Joe Nye, e-mailed yesterday to tell me he had forwarded my last blog entry about Christies premium rates to a number of his clients. Joe has always been a big booster of Chappell & McCullar, which we appreciate. Joe is one of those designers that antiques dealers love. When he’s shopping, he means business, and frequently has his clients in tow. He’s pretty specific about what he’s after and always has a budget. Not from Joe any of this ‘price isn’t an issue’ malarkey. I must say, as often as I’ve heard this from other designers, what it always signals to me is that the designer hasn’t had the guts to have a pricing discussion with their client, and expects me to.

Pricing is always an issue, and making certain to get your money’s worth. With his better heeled clients, I have often seen Joe discussing a range of pieces with them, carefully explaining that quality costs money, and, while the client might think the differences between best quality and run of the mill are pretty subtle, quality will always stand on its own, and declare itself time and again. Purchasing the best quality always represents the best value in the long run.

Interestingly, yesterday I also had an e-mail from another Los Angeles based interior designer, declining interest in a piece we had offered, as he thought it was pricier than what he was after. He cited auction sales prices of a lot less for pieces he considered similar. My experience to date has always been that, when a client, either collector or designer, says they can get the same thing for less somewhere else, either from another dealer or at auction, when I have an opportunity to see the purported ‘same thing’, it never is. Better quality? It never is that, either.

For anybody that will listen to us, Keith McCullar and I always say we treat our inventory as a fungible commodity. We price it according to what the same type of piece of the same quality has sold for, either at a dealer’s show room or at auction. Our pricing is never ‘keystoned’- automatically marked up based on some arbitrary multiple of what our acquisition cost is. Consequently, we price items to sell, and sell within two years. Nearly all of them do.

Price means nothing if what you are offering isn’t accurately described. We are maniacal about that, and nearly obsessive in trying to find exemplary quality. Not always flashy, but always good quality.

None of the above, however, universally describes the business models employed by a number of our fellow dealers or the auction houses. Have you read the disclaimers and rules of trading printed inside the front and back covers of nearly all auction house catalogs? And you still want to buy at auction? Yes, if the auction house makes some egregious error, they claim they’ll make things right for both buyer and seller. And perhaps they will, but not automatically. In fact, for any of the problems I have had over the years- items damaged by the auction house after purchase, items mis-catalogued- the list goes on and on- I have never, and I mean never received any financial redress from any auction house, even when they admitted they were at fault!

Unfortunately, some of our dealer fellas make matters much worse by what they do, and have had the effect of driving buyers to auction houses as a supposed safe harbor. One local San Francisco dealer, in business for a number of years and now retired, did an extensive business in ‘period’ English furniture. How many of his pieces have I seen, in mutual clients’ homes, or offered for sale to us by a client who no longer wanted the piece, and I have never, and I mean never seen one that was accurately described.

So, the question is begged- who do you trust? The auction houses? Perhaps within limits, but don’t assume automatically that you are getting value for money. If the piece is not as represented or is damaged, good luck in getting the auction house to make it right. Accurately described? Possibly, but only possibly.

Antiques dealers? Yes, within limits, but shop around and expect to get what you pay for. If one dealer’s Georgian table is $25,000 and the dealer around the corner is asking $50,000 for something similar, don’t assume the less expensive table represents better value. You might find the less expensive ‘Georgian’ table has significant alterations that make it barely a period piece of furniture at all. The table may in fact be worthless.

So, who do you trust? We’ve just put a links page on our website to answer that questions. To use the old aphorism, birds of a feather tend to flock together. An honest dealer will affiliate with and refer only other honest dealers. The auction houses? Their marketing budgets are large enough- they don’t need referrals from our website.

Christie’s has announced that its buyer’s premium will increase to 25% for the less expensive lots in its sales. This applies to all classes of goods, from contemporary furniture to antiquities. Of course, the premium charged on the hammer price is not all inclusive. In London, for instance, the auction house charges 17.5% value added tax on the premium, quickly bringing the buyer’s premium to an upcharge of around 30% over the hammer price.

Christie’s and Sotheby’s have both made it very clear they wish to focus on the higher end of the auction market, with Sotheby’s in London, for instance, planning on closing their second tier salesroom at Olympia. Christie’s has likewise announced cut backs at its second tier South Kensington salesroom, discontinuing its collectibles sales. With the premium increases, doubtless other types of business will be driven away. With the premium increase, the major auction houses have moved away from their courtship of the private buyer whose business they so aggressively sought just a couple of years ago. How long will Sotheby’s ‘Arcade’ sales and Christie’s ‘Interiors’ sales continue? Not much longer, I bet.

Private buyers will find typical auction purchases to be more expensive than they had been, but has purchasing at auction ever really been a good deal for the occasional purchaser? Not really. Premium rates inclusive of local taxes and credit card fees have always made auction purchases expensive, always contributing at least 20% to the cost of any purchase. What’s more, the purchase is absolute- you buy it, you own it, in ‘as is’ condition. No returns, unless it’s consigned for resale, and the buyer who is dissatisfied with his auction purchase finds he has to pay another 20% plus to the salesroom for the privilege of having them sell it for him- for whatever they think its worth. If the buyer overpaid for the piece originally? Too bad.

It has astonished me that so many occasional collectors and interior designers over the course of the last few years chosen to make purchases at auction. Except for the excitement of raising your paddle, what’s it got them? Purchases that would have cost them exactly the same had they been acquired from a reputable dealer, which dealer would have allowed them to take the piece out on approval to see if it worked, and accepted it back gratis if it didn’t. The same dealer that, probably, would also take back the purchased piece years hence, if the client decided they didn’t want it.

Although the better art and antiques dealers have always offered a level of service the auction houses couldn’t, what’s apparent now is that the auction houses, for the buyer, aren’t even willing to be price competitive. Don’t worry, though- we offer service, and price, with a smile!

The consensus of opinion is that today’s stock market correction was due to continued worries about sub prime mortgages, particularly after Countrywide Financial, the nation’s largest mortgage loan broker, reported earnings significantly less than Wall Street expected, or the company itself had projected. It is important to bear in mind, though, that Countrywide is reporting earnings, not losses. Given that Countrywide’s primary source of revenue is origination fees on mortgage loans, that they are making as much money as they are strikes me as a good thing, and not in any way indicative of wide scale problems in either the mortgage industry or the housing industry generally. Presumably, if Countrywide is still reporting earnings, they are still originating, and remarketing, mortgage loans.

In fact, what people overlook is that so many sub prime mortgages, those ‘no qualifier’ and stated-income loans, were made to home buyers whose large size of loan and income stream makes mortgage loan underwriting difficult. The primary underwriting basis for many of these loans, simple as it sounds, is a significant cash down payment from the buyer, usually at least 30% of the purchase price of the property or  its appraisal value, whichever is more. Consequently, in spite of some contraction of real estate values in some markets, the almost all sub prime mortgages remain very well collateralized. Moreover, much of what we read about how sub prime mortgages are effecting financial markets has to do with hedge funds and derivative investments that are in some way composed of sub prime mortgages. Assuming some kind of Moody’s or Standard and Poor’s down grade to the fund, the par value declines- in spite of the fact that the underlying debt instruments may still be as money good as they ever were!

Further, home builders themselves do not have massive inventories of unsold homes. Home builders, however, have to build and sell homes to make money. Consequently, those companies that expanded in order to meet the unprecedented demand for new housing units over the last 6 years, are naturally showing a large amount of red ink while they contract their overheads to match reduced demand for their product. Did I say that home builders do not have massive inventories of unsold homes? It bears repeating, as the purchasing slowdown happened so quickly it is difficult to imagine that suddenly, all demand for new housing had been met. In fact, what home builders tell me, the pundits who predicted a slowdown for at least a year before the slowdown began late in 2005 began to influence buyers who began to think that, if they waited, housing prices would decline. Did demand slacken? No- what replaced demand amongst buyers was fear of overpaying. At some point in the not too distant future, buyers will cotton on to the fact that houses continue to be a safe investment, and, with pent up consumer demand  and no inventories of new housing, demand will quickly outstrip supply and prices will go through the roof.

‘Safe as houses’ as the old saying goes, certainly once consumer confidence overcomes fear in the financial markets. And sub prime mortgages? Safer than you’d think.

Yesterday, Grosvenor House. The two days prior, Olympia Summer Fair. Art and antiques overdose? Hardly- I’ll be back at Olympia tomorrow and Grosvenor House on Monday.

The look of Olympia is wonderful- bright, airy, and the main floor with some impressive stands. This year, Partridges, a refugee from Grosvenor last year, is joined by Malletts and Pelham Galleries. Malletts have kept their place at Grosvenor House, but have done a kicky, two storeyed booth at Olympia with a mix of material- 20th century as well as period- giving their stand a look that might shock their regular visitors at Grosvenor.

Pelham Galleries have done something terrific from the outside- a free standing pavilion, redolent of what one might find in the garden of the quality- vaguely Middle Eastern in feel with colored marble pilasters affixed to the exterior. Impressive from the outside, the ingress is a bit pinched, making it a little less inviting than it might be to enter and view what’s inside. Indeed, one feels trapped inside and not at ease to have a good nose around. But, that’s only one man’s view, and Alan Rubin will doubtless have quite a bit to say about the design- both its rationale and its success. Wait for it in the next issue of The Antiques Trade Gazette. Still, what is more significant than anything else is the fact of Pelham, an institution at Grosvenor House, and now at Olympia.

Overall, the stands at Olympia looked good- open, with an excellent mix of traditional and modern material. Gordon Watson had a large stand with the mix of mid century material that he’s known for. My colleagues Reindeer Antiques, although on the gallery level, none the less have an impressive stand with a wonderful mid 18th century gilt wood serving table with a breche violette marble top. Fantastic looking, with its oversized paterae at the top of the legs, possibly the work on Francois Herve, or another émigré craftsman.

The stands that were in the main the most impressive were those like Reindeer where the items were impressive, and display sufficiently spare to showcase each piece. Having said that, there were a number of traditional dealers whose stands appeared the way they have always done, with a mix of mostly brown furniture- good quality, to be sure, but a sea of mahogany, none the less.

Grosvenor House- well, what can one say? The grandfather of all quality fairs, the ne plus ultra of English furniture, certainly. And, in terms of quality, this year did not fail to disappoint. Actually, it did fail to disappoint, because it failed to surprise. Yes, the stands all had good pieces, but nothing that one wasn’t already aware of, and some that had only recently been acquired in the sales rooms. Certainly, the ballroom of Grosvenor House makes for some logistical limitations- limited space and consequently, a limited area for display, and for aisle ways for punters. And, of course, the champagne bar, already busy by noon yesterday, has to be sandwiched into the middle of the floor. Expensive real estate for the dealers who participate, so, as a consequence, it isn’t too surprising the dealers all want to shoe horn as much material into this pricey space as possible.

In both shows, I did spy a few red dots. And there was at least one noteworthy sale. At Olympia, Butchoff Antiques had a large Wright and Mansfield desk that sold to a Russian oligarch on opening day for something in the range of £500,000. That’s a good day’s work.

Olympia Summer Fair closes tomorrow June 17 at 5PM, while Grosvenor House runs until Monday, June 18, closing at 8PM.

Free standing ‘stage set’ vignettes and top notch dealers, albeit 300 of them, make the new look Olympia Summer Fair sexier than it has been. But will it yield results? Not that it isn’t always a good day out. This massive, 35 year old fair, a mainstay of the Olympia Exhibition Halls in Kensington, overwhelms the first time attendee who might be more accustomed to so-called ‘table top’ shows of collectibles at the local fairgrounds.

The range of goods over the last couple of years has become even more extensive. Although primarily in the decorative arts, with a heavy emphasis on furniture, it hasn’t been just brown furniture for a number of years. The range is from the best of traditional 18th century, and earlier, design, to the best of Europe in the 20th century. If you are an Adnet lover, I promise, there will be plenty for you to look at.

Our London colleagues Reindeer Antiques will be there, of course, and I encourage my readers, all ten of you, to make yourselves known to Peter Alexander who will be manning the stand.

Traditionally, one of the terrific things about Olympia was its brief time overlap with the more prestigious Grosvenor House fair, allowing one to attend both on the same, or better, alternate, days. Grosvenor House, around since the 1930’s utilizing the grand ballroom of the hotel of the same name, this grand old fair is in the same league as TEFAF Maastricht in terms of the quality of material, but with a particularly British slant. Interestingly, Malletts and Pelham Galleries, always big exhibitors at Grosvenor House, have followed Partridge’s lead (wouldn’t they hate my saying so?) and will be at Olympia. What’s the reason? Speculation, of course, but the attendance at Olympia is far greater than Grosvenor. Our business is all about numbers of punters seeing your stock, so, perhaps, the chances of the right buyer coming by are felt to be improved participating in the higher traffic Olympia fair. After I’ve seen both fairs, I will let you know.

Shopping the fairs, will there be any bargains? I doubt it. Bear in mind, the dealers at the fair are some of the world’s best, and most have been around for years. In the case of Malletts, for nearly a century and a half. Consequently, they know their stock, and that of their competitors, so well that the likelihood of finding a sleeper is remote in the extreme. Value for money? Well…quality for money, anyway.

he Olympia fair runs from June 7 through the 17th at the National Hall of the Olympia Exhibition Centre. The Grosvenor House Fair at Grosvenor House, Park Lane, runs June 14 through the 20th.