A memorandum to our appraisal clients with notes on replacement value, and internet-driven changes in the book trade


FAIR MARKET VALUE (FMV): Unless otherwise stated, the valuations in this appraisal are for fair market value (FMV) as that term is defined by the IRS. Essentially--the price a willing and reasonably informed buyer would pay a willing and reasonably informed seller. Neither party is considered to be under a short-term necessity to buy/sell and each has considerable but not necessarily exhaustive knowledge about the marketplace for the item in question (or for items of its type). The parties are independent. FMV is a time-bound concept, i.e., FMV of a given item is for the point in time at which it is appraised. Many categories of books do not change markedly in the short run of time and are in the course of a few years affected only by the value of the dollar. However: demand and supply, fad and fashion, market saturation--these and other factors can fluctuate over time. [Sometimes dramatically. Sometimes quickly.] So too can the extent to which information about a book, type of book, or author is disseminated in the dealer and collector community. The publication of a new "price guide," a landmark auction or catalog, an article in a book collector periodical, a movie or TV series, increased attention to and use of on-line listings and comments-- all these factors and others like them can affect prices.

WHAT IS THE MARKET? Note that a key part of the assignment of FMV requires the appraisers to decide what they believe to be the market for a book or collection. For example, they ask themselves who are the likely buyers for material of this type? Primary and secondary buyers? What mix of libraries, dealers, collectors? They must always consider effective demand: not simply, for example, whether libraries want the collection, but what their budgets are like for such material, and how this collection is likely to stand among acquisition priorities.

FAIR MARKET VALUE AND PRICES: FMV is, then, an abstraction. It is not "a price." It is not defined as what any one dealer (regardless of who it is) would sell an item for-- although there will sometimes be a coincidence between FMV and what one or more dealers may price a book. The more unusual and the scarcer the book--the harder it is to define fair market value. And the harder it is to relate fair market value to what you can expect to pay for or get for a book. At the extremes of rarity, of condition and significance, connoisseurship judgments and a variety of idiosyncratic factors are more likely to come into play. We'll be happy to discuss or give examples of this dynamic.

FMV AND SELLING: FMV is usually (but not always) defined in terms of a private party as retail buyer (a collector, a library) and a dealer-seller. If the owner of an item can sell directly to another "civilian" and avoid the dealer community, he or she may indeed maximize their return.. But this direct selling is not always feasible, and rarely easy or quick. If it were, no dealer community would exist! When a retail owner sells to another private party-- FMV may be a relatively useful guide figure. But most often the owner cannot easily locate a buyer. And libraries almost always would rather buy from or through a dealer than a private party. The reasons for this are easily explained-- and we'll be happy to do so if you wish.

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DEALER-BUYING: In general terms, dealers buy as a percentage of what they will price something. This can vary widely depending on the dealer, and importantly on the particular book or type of book. If a dealer has an immediate client for a book, if the book is close to the core of their specialty, if the copy is superb, if they are feeling flush, if it is a "good fair book" and they have a book fair coming up in a month-- the percentage they pay will be higher than otherwise. For a $50 book they may pay 20%-30%; for $500-$1,000 and better books they may pay 40-60%. They may take books on consignment at commissions which vary widely (10% to 50% but usually in the middle) depending on the particular book, the value range of the book, and on other conditions of the consignment.

MORE EXACTLY: dealers buy as a percentage of what they expect to realize at sale (actually take in, for example after discounting) as modified by any needed costs of repair or restoration, and more broadly--anticipated time, monetary, and labor costs of sale. That is, some books cannot easily be sold through catalog, internet or shop but are likely to require individual quoting to particular clients or require repeated exposure at book fairs. Some require extensive research and description before they can be offered for sale-- others relatively little. Further complications: does a book stand alone or is the it one of ten or 100 or 1000 you are offering the dealer. And selling collections (as opposed to aggregations) of books has its own complications.

MAXIMIZING YOUR RETURN: Maximizing return form the sale of a book requires patience and getting the best possible venue of sale for a book. Thus, some books cannot easily be sold through generalist antiquarians but require a specialist bookseller. Many do not. The conditions of the sale also affect return. Some books do better at auction, at a particular auction house, and some of them sell better at east coast rather than west coast auctions, some better in England, some better on the continent. Sale at auction vs. sale to a bookseller is a more complex issue than is sometimes appreciated-- and booksellers and auction houses will each be delighted to give you their version of the relative costs and benefits. In sum, the relationship between FMV and what a dealer might pay is not a fixed proportion. The relationship between FMV and what a book might realize at auction varies yet more widely.

THE BOOK MARKET/TRADE IS CHANGING. It is often observed that the book trade is now in a transitional period, that it has changed more in the past four years than in the prior two hundred. The factors of change include (a) internet search engines, specific to the used/out of print/rare book, map, and manuscript fields. (b) general search engines. (c) on-line auctions from eBay to Sotheby's, etc. (d) corporate and computer links among search engines, auction houses, and other sellers--and these change now every few months. Foreign as well as North American web sites and engines come on-line, link, and transform as the months roll by. A new world is before us. These changes affect different types of books and manuscripts in different ways. We'll be happy to discuss this as it relates to your collection.

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These are general considerations. We'll be happy to discuss these matters further. We are sometimes asked about "replacement value," "insurance value" and about whether appraised valuations differ depending on the use to which the valuation will be put. We'll be happy to discuss this with you.



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