The Philosophy of Buy Low, Sell High — What Pickers Need to Know
The phrase “buy low, sell high” is something you often associate with the stock market, but it is actually one of the most basic rules of any kind of business. You buy your product at a low price, and then you sell it at a higher one. When it comes to being a picker, whether your specialty is antiques, comic books, or classic cars, the same motto needs to apply to your picking.
Step One: Understand The Item
The first, and most important, step of being a picker is understanding what you’re looking at, and what it’s value is. For example, if you’re looking at a classic motorcycle from the 1940s with all original parts and pieces, that’s one thing. If that motorcycle was part of a limited run, and there were only a select number of them made, with most of the originals destroyed, then that item’s value rockets up thanks to how rare it is. Once you know what the item is, and the entirety of its history, you have a good starting place to work from.
Step Two: Know The Market
Once you know the item in question, you need to know the market you’re looking at. Let’s go back to the motorcycle from the previous example. Say, for example, that an item of this quality could go for as much as $100,000, based on previous sales and estimates of its rarity. However, there is no such thing as a guarantee when it comes to picking and selling. If the market has seen growth, perhaps because of a cultural shift where more people are collecting older cycles, then it’s possible this old bike could go for six figures or more. If, on the other hand, there’s an economic depression, then it’s more likely you’ll receive less money for the find. The value of an item is based, at least partially, on what someone is willing to pay for it.
Step Three: Figure Out Restoration Costs, and Profit
Once you know what the item in question is worth, and what you can expect to get for it, you need to figure out how much work and money you’ll have to put into it to bring it back up to top form. Classic furniture or toys may need some deep cleaning and a coat of paint or varnish, for example. In addition to restoration there’s the cost of maintenance and transportation for the find, which you also have to figure out. Those things are going to be costs to you, and they’re costs your eventual profits have to balance out in order to make your pick a good one.
Step Four: Bargain
Once you know all your costs, and what you can expect to make back from this item based on an estimate of the current market, it’s time to negotiate with the current owner regarding its actual worth. In order to make a good pick, you need to buy an item at a low enough price that you will be able to resell it at a profit that’s worth the time and the cost involved. You also need to look at the turnaround time. For example, if you can buy an item for $10,000 today, and sell it for $15,000 next week with relatively little work, then that is a great pick. If, on the other hand, you’ll need to wait for the market to shift, there will be months of restoration work involved, or the item will be a lot of work to transport, then those are all factors that need to weigh into your decision.
Most importantly, though, is to not get attached. Even if an item is a great find as far as value goes, if the owner won’t give you a price you can work with, or if the market just won’t allow you to make the profit you need right now, then you need to be able to walk away.
For more information on how to buy low and sell high, simply contact us today!