Customs & Resale Values

Loki

Loki

Joined
Mar 23, 2000
Messages
740
Reading Les' two threads and my recent feable attempt to sell some "custom" knives seems to indicate the resale market for customs can be very interesting - especially for us amateurs. Makers knives that are hot one time can be downright chilly soon afterwards. Maybe some makers knives can be considered investments but I suspect that it's like buying fine jewelry rather than stocks, bonds, or real estate. In my limited experience it seem that few cutoms or benchmades really hold any value. Am I wrong?
 
If you are investing in knives or like items to make money, you had better know your market and have extensive resources to cover your losses. My wife and I purchase things that we like to have and do not worry about the long term investment value. This takes the collecting from a business to a hobby! Fine jewelery has a substantial markup froma dealer and if you are looking to realise your full investment, you will not. Even stocks, bonds and real estate have no guarantee's built in! Buy reputable mutual funds for the long haul or T-Bills and purchase knives and jewelery that give you pleasure and don't worry about resale. Of course if you must sell some items to purchase new items than you may take a loss. You are better off selling to a colector than to a dealer who must make a profit and therefore will never pay the so called market value. By the way, the selling price is only determind at the time of sale between the seller and the buyer! Price guides do not guarantee anything!
 
Loki,

Bud is exactly right. You really have to know the market and where it is has been and where it is going.

This is why I stress doing your homework before you buy the knife. I know that Bud, Vel and Para all buy what they like and do not worry about resale value. That may be in the vein of the true collector.

My experience has been that most custom knife collectors at one time or another look to either sell or trade one of their knives. I did a lot of both before I ever became a dealer. Usually walking away scratching my head trying to figure out why incredible knife on the makers table is now only worth half to the dealer buying it.

It was only years later that I realized the knife I had bought was not worth the money I had paid for it. No one tricked me or lied to me. They were as unknowledgeable of the custom knife market as I was. They honestly thought that was what their knife was worth. Im sure just like you, there was no gun to my head when I handed over the money.

There is a very accurate saying in the area's of collectables..."you pay to go to school".

The only way to defeat this, is to not buy knives until you really know what you are looking at. But, that is no fun. So we plung in and buy knives. From all of us on my side of the table, we appreciate that.

My hobby is coin collecting. The saying in coin collecting is "before you buy the coin, read the book". There are several books out there on each type of coin. They are full of very important information on helping you identify, what you want to collect and how to go about it.

As Bud has pointed out, there is no book on how to buy custom knives. This book does not exist as pricing is not uniform in custom knives. Knife makers A B C and D may all make what appears to be the same knife, same materials, same dimensions. However, there may be $200 difference between A and C. Why?

Im trying to aliveate part of this problem. My final draft is almost complete. I hope by the end of November to have my hand book on buying, selling and trading custom knives ready for release.

Loki, if you email me off line I might be able to suggest some strategies to you.



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Les Robertson
Custom Knife Entrepreneur

http://www.robertsoncustomcutlery.com
 
They say that in automobiles the rarer, most expensive models appreciate more and faster than the high volume low priced models.

This rule carries over to all collectables, the nore desirable it was new the more desirable it will be used and especially so if the artist has been careful to promote themself. An artist achieves fame by producing unique high quality work and spending a lot of time promoting that work to the public over a long period of time.

It is unlikely that work by an artist will ever appreciate in their lifetime if nobody knows their name.

The ground rules of collecting are to purchase from artists that do very good work and promote themselves constantly. When you purchase from these people purchase the highest quality pieces that you can afford, unique if possible. Stay away from mass produced product, the dilution effect on the demand takes over here...too much product available for the demand equals lower prices.



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george
www.tichbourneknives.com
sales@tichbourneknives.com


 
George and Les, Very good comments especially about purchasing the best you can afford! I will pay a premium for an item that has been flawlessly maintained and comes with all orginal documentation. those types all have the best resale value if you ever have to sell. Les, I will cetainly purchase a signed copy of your book when inprint! I also agree that it is very hard to go toa knife or gun show and not be subject to the impulse purchase! That is where reputable dealer/collectors are valuable. I deal only with one gunshop owner where a handshake is all we ever need. I also agree that your education in collecting is going to cost you something. Just try to minimse you loss and do not fret about it. If you are spending the food and rent money for your family on collecting, seek help quickly as you have a serious problem. Figure out what you can afford to spend, hold to that budget and don't be afraid not to buy something if every aspect is not correct! I have lost a few items that I wish I had purchased but I believe I have avoided many more bad ones. Of course I also have a Winchester knife that was made in Germany which I thought was orignal! Cost $45, Value ZIP but I did learn to stay out of areas that I knew nothing about!
 
I would compare reselling knives to the gun market.......If you have something that is rare and valuable...its easy to get what you want.......BUT...you have to wait for the right buyer....one of the most important things to realize about the secondary market is that everyone knows what the retail is and EVERYONE wants a bargain....so a lot of people wait for the bargain...and they do show up. The wise seller waits for the right buyer.....right Les? I see guns that are going for half what they are worth all the time...but I cant buy all of them....I only get what I WANT>..same as knives....buy ones that are desireable....and resellable...and you wont have a problem...except that is what everyone else wants.....its not easy... but I think its fun...
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Tom,

Exactly right. There is something to be said for the "art of the deal". Those who post things like "must sell" and "need money for a new knife". Congratulations, you have just told people you are desperate for money.

Someone brought up on another thread that he had seen some of the LDC knives being sold for as much as a 40% loss. Consequently, my advice on future knives and their potential was tainted.

As Budrichard pointed out. If you are the type of custom knife collector who likes to rotate their knives on a semi-regular or regular basis. Your best strategy would be to develop a relationship with a dealer.

I say this not because I am a dealer, but because I did this with Paul Basch 12-13 years ago. I bought a large portion of my knives from him. When I was ready to move up, he made it as fair as possible.

There was no "ringin of hands" or "gnashing of teeth". He knew the market better than I and I valued his advice. Long term dealing with Paul saved me thousands of dollars both in the knives I purchased from him and the ones "I did not"!


What was not taken into consideration was the mind set of the sellers. Why would they take such a loss. Why wouldn't they consider breaking up the set and selling indivdual pieces. The makers we used in those three series are well respected makers and selling knives as individual pieces and as Tom said waiting for the right buyer, would have gotten those individuals a lot better return than 60%.



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Les Robertson
Custom Knife Entrepreneur

http://www.robertsoncustomcutlery.com
 
Knives an investment?

I consider my knife habit an entertainment expense. If I can recover 50% someday that's great. Imagine if you had spent the additional dollars on ball games, meals, drinks, and travel; how much would you get to recover?

It is fair to expect that some part of my collection will appreciate while other parts will lose value. The funny thing is that it is often more of a cycle then a trend. It does not matter whether you buy production or custom, expensive or cheap, unknown or well known, rare or common; a knife's price will depend on market demand on the day you sell it. 10 years from now the hottest thing going may be one of the cheap Tiwanese POS available in every flea market today. All it takes is for someone to author a popular book, release a hot movie, or change a law, and the market value structure will change.

Only 50 years ago we would have been able to buy fantastic antique swords by the trunk load, purchased Case knives at a dime store, and acquired bayonets for their scap metal value (if even that much). Just step back a moment and look at the crazy survival knives of the 80s, or the tactical knives of today. Could anyone have predicted those markets.

Just enjoy yourself. When you need to sell something, then sell whatever is hot and don't worry about the rest of it - its day will come (maybe?).
 
I think the whole point of all thats being said is that MOST people dont have money that they can waste....life is too short and we arent heart surgeons (maybe you are...then i will post my url below)...but we all need to get the most out of anything we put time, effort, and money into, whether its our car, going fishing, or buying a new toy (guns and knives are toys....face it). When it comes time to move up, out, or sideways....its comforting to know we can get most of our money back....but that takes what Les has been saying all along...HOMEWORK first....not last...anyone can learn by making every mistake in the book..thats a no brainer. So buy what you like......and use your head....thats WHY God put it there.
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http://www.mayoknives.com


 
Not2Sharp,

Actually, if you do your homework you can predict what the market will do. The only thing I took away from time in Military Intelligence as an analyist was the concept of indications and warnings.

These exist all over the custom knife market. However, if you wait for a knife magazine to point it out, or perhaps pull it out of a forum such as this. You are probably to late to take maximum advantage of what has been there for all collectors to see.

I get comments all the time about the "makeup " of my table. Why so many folders, why so many fixed blades, etc. I don't just buy to be buying. Every single knife I buy has a purpose for being in my inventory beyond just to resell. Generally, my table is a reflection of not only the current market, but the coming market.

There are makers out there right now, who will be very sought after in 5 years, do you know who they are? What would be an indication as to what would make them sought after in 5 years (or less)?

If you don't know, you are not doing your homework.

Investment has been used here mostly as a term to describe money that you will make in the future on the money you spend now. This is known in business as the ROI (return on investment).

Most people mistakenly only look at the monetary aspect of the ROI. Actually, it is much more inclusive. For serious and semi-serious collector, you biggest investment is time.

The time invested in "homework", the time invested in going to shows, time invested on the internet, time invested in talking with makers, dealers, other collectors about knives.

The act of spending the money, involves only seconds.

Not2, I understand what you are saying. But I would recommend you do a little "homework" before you buy your next knife.

That investment in time, may lead to a good ROI!



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Les Robertson
Custom Knife Entrepreneur

http://www.robertsoncustomcutlery.com
 
Of course there are knifemakers whose knives will be sought after in 5 years but that is no guarantee that the knives he's making today will be worth any more than you're paying for them today.
I've seen many early knives from famous makers selling cheap.
 
Les,

I understand what you are saying. As I mentioned above I consider this a hobby which I practice primarily for entertainment (frankly it helps me relax). I do spend a lot of time and effort on research, but I do so because I like older knives, and therefore need the tools to properly identify them and their fair market price. My investment in my library far exceeds the small investment I have put into the knives themselves. I do not take my pruchases any more lightly than you do... we simply have different priorities.

However, if we seriously look purely and objectively at an ROI, knives (as collectables) are generally a weak investment. Even if you want a modest 10% gross ROI, your knife will have to sell at more than 1 1/2 times what you paid for it in order to achieve this within 5 years, and that's about a 2 1/2 times multiple after 10 years. Then, even if ten years out, you did manage to sell it at 2.5 times what you paid for it; when you subtract inflation, storage cost, selling cost, and opportunity cost, you would still have a net loss. Now, how many knives did you purchase 10 years ago (at retail) that are selling for more than 2 1/2 times your original purchase price today?

If anyone wants to invest in knives then they will have to act accordingly. Forget five years out and focus on turning a 40% gross within 6 months or less.

 
Ferret,
You bring up one of my favorite topics. On the one hand, if the knife is right handed, there is a larger market of people to sell the knife to. On the other hand, if it is left handed, it is presumably more rare. I think it comes down to waiting for the right buyer.

As a lefty, I would probably pay close to the makers price (or maybe more) for a lefty knife that I really like. But I guess if you're trying to sell a lefty knife that fewer people want, you might have to wait a while, or take a loss.

~Mitch

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My Hobby Page
 
Mitch, thanks for that, I'd pretty much reached the same conclusion. I might email you so we can speak lefty
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Not2,

You have missed my point. I was not advocating custom knives as an investment. I have told hundreds of clients to put their money in stocks, bonds, mutual funds, etc.
As the rate of return is much greater in those financial vehicles.

However, you can increase your rate of return drastically by incorporating some simple strategies.

One of which is to become a business, strictly for tax purposes. This allows you to write off a percentage of the money you spend on the ancillary expenses of your knife collection. Travel, shipping, phone, food, etc. While the IRS has guidelines for small business's. The key phrase to remember is "intent to make a profit".

Please for those of you who are thinking of "jumping on" me for my last paragraph. Before doing so, at least have owned a business. Yes, there are limitations, but a good CPA will walk you through those.

Also, if foucus simply on the "investment" end of custom knvies. You can make money. There are simple strategies that will allow you to make 10% profit annually.

While there are better rates of return on other investment vehicles, however in the big scheme of things, 10% isn't bad.

When I first started my business I had about $5,000.00 worth of custom knives. All of these were purchased at full retail. Over the next two years I put in an additional $5,000. After that the only money used for the business was taken from the profit of the sale of custom knives. Needless to say I have recouped my initial investment years before I became a full time custom knife dealer.

Most people who are very serious about their hobbies, devote a lot of time to it. The only difference between hobbyist and a businessman in a lot of cases is one does expect a return on their investment.

As Tom Mayo pointed out, for most of us, money is a finite resource. So why wouldn't you want to make the very most of each dollar you spend. Especially on your hobby. As the more money you save, the more knives you can buy.

Not2, you say we come from a different vantage point. Acutally, we don't. The makers I work with through my business are many of the same makers I bought from as a collector. Others who I bought from once I became a dealer, are makers I would have bought from as a collector.

Proof that you can buy what you like and make money at it.



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Les Robertson
Custom Knife Entrepreneur

http://www.robertsoncustomcutlery.com
 
99% of the time, if you paid retail for the knife, you will lose your ass on resale. (100% from my personal experience, but i'm trying to be optimistic)

my goal is to buy the knife that will stand the test of time holding my interest.

 
Les,

Good points. I have been thinking of going for the business license, and probably will soon. It's not just about the tax issue, registering as a legitimate business concerns facilitates additional information and access. It probably is the best way if you really want to wheel and deal.

Not sure if I really needed the encouragement
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Thanks,
N2S
 
SD,

Here are the names of makers that you can pay full retail and probably within a week make a profit on their knives.

Tony Bose
Walter Brend
Kit Carson
Geno Denning
Ernie Emerson
Jerry Fisk
George Herron
Schuyler Lovestrand
RJ Martin
Ken Onion
Al Polkowski
Rob Simonich
Bob Terzuola
Michael Walker

Well there is a baker's dozen. Now, Im not saying it is easy to get knives from these makers. However, the effort will be worth it as knives from these makers generally sell very quickly and if you desire you can sell them at a premium.

SD, there are many more makers out there that you can make a premium on their knives. You just have to do your homework.

The other key is, it helps if you have the money when the knife is available. Which is why discretion can be a very valuable tool to utilize when a finite resource such as money is being considered for use.

Also, another sales technique to consider is don't put to many knives up for sale at once on BF. This can make the choice difficult for would be buyers. The inablity to pick between 3 or 4 often times leads to the purchase of none.

I know I have lost sales at shows, because I gave clients and potential clients too many choices.

If you are a person who likes to buy knives and turn them in 6 months or less. You should really consider a web site. Generally you can get one built and hosted for a year under $800.00. Of course if your a business, that would be a deductable expense.

Also, this allows potential clients to go an look at your knives that are for sale 24/7/365.

The money you lost selling your knives for well below retail would probably cover the $800.00.

Hope this helps.



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Les Robertson
Custom Knife Entrepreneur

http://www.robertsoncustomcutlery.com
 
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