Article Written by Karin Dillie, The RealReal American Bar Association
Let’s be honest—no one likes going through a closet—not even her own closet. How long have you had a pile for donation sitting in the corner without touching it? Often, we resist acting because we fear it’s not worth it.
This shift has left advisors confused about where to begin and how to understand the value of items in an estate’s closet and the luxury items that decorate a home. Below are common misconceptions you want to avoid when settling an estate and tips on how to ensure you’re getting your client maximum value.
Misconception #1: Personal Property Doesn’t Yield Much Value—It Shouldn’t Be Prioritized
On average, there are 300,000 items in a home, and it’s often advisors who are tasked with going through them. Mary MacVean, For Many People, Gathering Possessions Is Just the Stuff of Life, L.A. Times, Mar. 21, 2014. But advisors—who must be both judicious with their time and dogged in getting clients high returns—default to the obvious heavy-hitters: tax benefits, bank accounts, and major assets of the deceased. Meanwhile, the family is left to handle those 300,000 pieces.
Unfortunately, this “divide and conquer” strategy doesn’t work when—more often than not—family members have neither the experience selling property from an estate nor the expertise and network to ensure they’re obtaining full value. The popularity of estate sales, especially online, has grown in recent years, bringing the number of companies serving the market across the country to 14,000. Alan Feuer, Managing Estate Sales Becomes Big Business, N.Y. Times, Mar. 11, 2015. This popularity has increased the value of the personal property in a home. Luxury items in particular have seen an increase in the secondary market as access to the internet has grown. Vintage items and unique pieces are on the rise as well, partly as a response to the waste from the “fast fashion” trend. Tracy Diane Cassidy and Hannah Rose Bennett, The Rise of Vintage Fashion and the Vintage Consumer, Fashion Practice, Vol. 4, Issue 2, at 239 (2012). Online luxury consignment marketplace The RealReal has sold estate collections worth $1 million in just clothing, shoes, and handbags.
As an advisor, you can help your clients narrow down those 300,000 pieces by looking for higher-quality items—especially branded and heritage pieces—that retain their value. It’s possible for your client to have a Chanel coat with a resale price of $3,000 or more, a Louis Vuitton handbag that sells for $2,000, a pair of Salvatore Ferragamo shoes with a resale value of $675, or a Versace side table worth $7,500—all of which could be overlooked.
The easiest way to judge value is by brand. Many luxury designers have cultivated reputations for quality and craftsmanship stretching back over 100 years, resulting in pieces that hold their resale value. The top performers in 2018 were Gucci, Louis Vuitton, Chanel, and Hermès—look for these tags in clothing, on accessories, and in the jewelry box. Packaging can often give you clues as well; Hermès items come in bright orange boxes, and Tiffany & Co. pieces come in the traditional “Tiffany blue” boxes and bags. There are still hundreds of other brands that maintain high resale value, and the best way to find these items is by touch. Are the sweaters soft cashmere? Does the leather feel smooth and buttery (not like plastic)? Lace, embroidery, and silk are often high-quality and could garner a good price. If the client left tags on their items, check to see the retail price; expensive items that hold up over time also often hold their resale value.
As luxury brands have expanded into the world of home decor, it’s worthwhile to think the same way about decorative items, furniture, and works of art. Household items, from chairs to blankets to prints, are easily identified by brand and can be spotted by markings and stamps. For example, Hermès blankets retain an exceptionally high resale value. Older, original Eames furniture items exemplifying the classic style the designers are known for also commands high resale prices.
If this sounds like a lot of work, know that you don’t have to do it alone. Some resale companies employ trained luxury experts who will come to clients’ homes to look through each label, sorting through what has value and what doesn’t, and ensuring items are genuine. Services like these make the process of deciding what to sell very easy.
Misconception #2: Valuables Depreciate at a Fairly Similar Rate
Most people know a Picasso painting or Calder mobile will retain its value, those recognizable items are few and far between. What may be surprising is that, in many cases, luxury clothing, jewelry, and accessories are plentiful enough to add up to the prices of some of those artworks. Advisors often make the mistake of assuming all items in a home depreciate at the same rate and use a general value for the appraisal and estimate of value. It can be too cumbersome to inventory every single item, so lots are formed and priced as part of a group. In fact, different types of items depreciate at different rates, especially as tastes change and luxury culture shifts.
For example, clients may spend tens of thousands of dollars on high-quality pianos with interesting motifs, but as millenials are moving into smaller homes and acquiring smaller furniture, the demand for pianos has decreased. Thus, pianos purchased 70 years ago, often grand and ornate, have seen a decrease in demand, pulling down the resale value. This trend applies to other items that are cumbersome and expensive to move, making them difficult to sell because of cost.
Unlike pianos or other large pieces of expensive and ornate furniture, handbags and luxury accessories have come back into vogue and often retain much of their original retail price. Focusing on luxury items and specific brands will help you get the highest return for your time. For example, the famed Hermès Birkin bags can sell above their retail value for years after they are produced. With some Birkins selling for up to $100,000, it’s worth looking for these pieces that are smaller and potentially much easier to sell.
To discover items with the least depreciation and highest ROI, look for three things: quality, brands, and trends.
Quality: High-quality luxury pieces are made with expert craftsmanship, meaning they are constructed to last. With clothing, this means using the best materials and precision construction. Look for consistent stitching, soldered hardware, and fabrics like cashmere and leather. For furniture, look for brand markings, consistent finishes, and well-constructed joints.
Brands: Designers give the strongest indication of value. When furniture is stamped, experts can trace the type of materials and construction that went into a piece. With this confirmation, pieces sell for more. For handbags and accessories, brands like Louis Vuitton are extremely particular about everything from materials to the processes used to create a bag’s hardware. For decorative pieces in the home, Hermès retains its resale value, as do investment pieces by brands like Christofle, Knoll, and Herend.
Keeping an eye out for these items, looking for brand names, and speaking with the family about where the deceased shopped can help you get a sense of the quality of items an estate may have. Often, clients who have one of these brands will have many of them.
Trends: It can be hard to stay on top of trends, but they are one of the most important indicators of value. Some trends last a long time: Hermès cemented its place in luxury when Queen Elizabeth purchased a hand-painted china set by the brand in 1851. Other trends change with tastes, and fashion brands are hugely influenced by their head designer. For example, when Alessandro Michele took over Gucci, it went from a middleground brand to surpassing Hermès on the list of the top-selling brands in resale. Trends are hard to predict, so it’s easier for advisors to rely on brands and quality when assessing the overall value of an estate and to bring in experts for an understanding of trends.
Misconception #3: Local Resellers Are Equipped to Handle the Sale of Most Estates
With over 300,000 items in a home, understanding and allocating value are undoubtedly daunting and calls for a fast and easy approach from outside help. The default is often to work with a local vendor, usually a generalist, to sell personal property. But this approach doesn’t always maximize the value you should be getting for your client. Sales venues with authentication expertise and the wide, even international, reach of an online platform will attract buyers willing to pay top dollar and get you the highest ROI on clients’ personal property.
The luxury market is expanding, and the resale market is growing along with it—luxury sales grew to $1.7 trillion in 2017, up four percent from 2016, and mostly online. Lorelei Marfil, Global Apparel and Footwear Sector Rose 4% to $1.7T in 2017, Women’s Wear Daily, Feb. 7, 2018. Moving resale to the internet has further increased demand, opening up the secondary market to millions of consumers in a way bricks-and-mortar stores couldn’t have imagined 20 years ago. The internet also allows for scalability. No longer are resellers confined to the 200 people that attend an auction or walk into a consignment store in a week. Instead they can reach millions of customers across the globe. Additionally, millennials and Gen Z are changing the way sellers operate, because those generations grew up using and trusting the internet; they buy more online than previous generations. Eli Blumenthal, Millennials Drive Spike in Online Shopping, USA TODAY, June 8, 2016. Millennials spend more than $65 billion each year and have influence on up to $1 trillion in total consumer spending. Genevieve Aronson, Nielsen Unveils First Comprehensive Study on the Purchasing Power and Influence of the Multicultural Millennial (Jan. 18, 2017), https://bit.ly/2PlERTE.
National and international resellers also have expertise that can’t always be found locally. Although there are some easy ways to tell which items have value, there’s also quite a bit of nuance and knowledge needed to value the breadth of items you can find in an estate. Unfortunately, the number of counterfeit items has grown tremendously in the last 20 years, and it’s no longer just Canal Street vendors sticking labels on faux purses.
Instead, counterfeiters spend thousands of dollars to trick consumers into buying fake luxury goods by copying the materials, serial numbers, and subtle labels. This isn’t just true for handbags and accessories anymore; counterfeiters also go after any branded item. Advisors should look closely at home items like Waterford crystal, Knoll furniture, and Jonathan Adler decorative items—if genuine, these brands have a high resale value. Generally, sales venues that authenticate property can achieve selling prices up to four times higher because clients will pay more for less risk.
It’s important for advisors to rely on best-in-business solutions to help them understand the secondary market for valuable items. When looking for a venue to sell, it’s key to look for experts in their market. Don’t be fooled by a seller claiming to know it all. The secondary market is too large and complex for any one person to be an expert in everything. You want to find a venue that knows its product well, has sold a large volume of property, and can market it to the most buyers. You want a venue that will make it easy to sell for both you and the client.
White glove service should include calling in specialists to value items, giving you a full understanding of the possible selling prices, and a clear picture of the consignment terms and fees. The best experts will spend quite a bit of time digging through closets and drawers, looking at decorative items on tables and throughout the home, and going to the dry cleaners to make sure they are getting every item possible. Some experts include this service as part of their business model, but others charge hourly or per project. You should also make sure specialists are tapping into the largest market available to sell items for the highest value—they should be well-connected with buyers and be able to generate buzz about the collection.
Next time you walk into an estate’s closet, especially one filled with clothing, jewelry, personal keepsakes, and too many shoes, apply these tips to get a better idea of its value—your clients will thank you for it. n
Top 10 Clothing & Accessory Brands That Retain High Resale Value
- Louis Vuitton
- Christian Louboutin
- Jimmy Choo
- Dolce & Gabbana
Top 10 Jewelry & Watch Brands That Retain High Resale Value
- Van Cleef & Arpels
- Tiffany & Co.
- David Yurman
- Patek Philippe
Top 10 Home & Art Brands That Retain High Resale Value
- Tiffany & Co.
- Andy Warhol
- Pablo Picasso
- Alexander Calder