Re: Value calculation

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Posted by Marvin Amstey on April 14, 1999 at 09:47:23:

In Reply to: Re: Value calculation posted by Jerry Silverman on April 13, 1999 at 19:08:08:

: : : : : I think that the value function looks like a demand curve, sloping down and to the right as we move away from perfect condition. The slope of the curve is, in part, based on the rarity of the piece, I believe. Relatively common pieces will drop very quickly as condition declines, because one can wait for a perfect example. Very rare pieces, on the other hand, have a much shallower slope because there is no ready availability of alternatives and one may want even a chewed up fragment of a certain type.

: : : : : The other element to this curve is the shape. I believe it is concave with the drop from a perfect example to a 90% perfect piece being rather steep, but the drop to 80% somewhat shallower, etc. At some point this curve may change again and steepen to zero, as the rug becomes a fragment, unless it is a very rare example.

: : : : : Any further thoughts?

: : : : :
: : : : : : Does anyone have a conscious or subconscious formula for calculating the value of a rug which they dearly wish to collect but which is damaged or repaired a little, a moderate amount, a lot? (with the obvious proviso that I can afford "X"). In other words, "I really have been looking for a rug with this design, function, color, rarity, tribe - whatever - but I see all the repairs and damage; what am I willing to pay for it? (as a fraction of a complete, untouched, undamaged piece)?" Or - should the question be: "this is so repaired and damaged, that I'll keep waiting for the right one." Would anyone wish to propose such a formula? We all use such calculations to determine our purchases, but is it possible to articulate them? Good luck with your calculations. Marvin

: : : : Dear John,
: : : : I think your anaology to a curve found in economics goes a long way towards describing what we do with less-than-perfect pieces. I wonder if there's anyone else who has a different take on this or believes the function has a different shape.
: : : : Regards,
: : : : Marvin

: : : Dear Marvin and John,

: : : Does this mean that the formula proposed by Caroline Bosly in "Rugs to Riches" is wrong?

: : : Damn!

: : : -Jerry-

: : I'm not familiar with the formula, the book, or her; please elaborate. Regards, Marvin

: In her 1980 book, "Rugs to Riches," she postulates in Chapter 9 that there is an objective formula that can allow you to "compare two completely different rugs using common factors. Later in this chapter we will convert these value points to money values by adding the key factor of country of origin."

: The common factors are:
: 1) Knots - 729/sq. inch and about = 10 points
: 600-728 = 9 points
: 484-599 = 8 points
: etc.
: 2) Materials - Silk pile on silk warp = 10 points
: Fine kurk wool on a silk warp or a fine cotton warp = 9 points
: Fine wool with or without silk inlay on a fine cotton or silk warp;
: also silk on a cotton warp = 8 points
: etc.
: 3) Design - (These are lengthy and pertain to minuteness of detail and curvilinearity vs.
: rectilinearity.)
: 4) Color - (These are lengthy and pertain to number of colors, combinations, blendings)
: 5) Age - 100 years and older = 10 points
: 70 years and older = 9 points
: 50 years and older = 8 points
: etc.
: 6) Condition - Perfect = 10 points
: Fringes loose but not missing and need "Stopping." All else perfect. = 9 points
: Excellent except for a repair or two, professionally rewoven, invisible from
: front and almost invisible from back.. Of the pile has been worn down so that it
: is short (1/8 inch or 3.1 mm. high), but it has been evenly worn so that
: surface of rug is uniform. = 9 points
: etc.

: Then you add up all the points for your rug.

: To determine the price of the rug you then multiply it by a "multiplier" she proposes for different kinds of rugs. For instance:
: Bijar: Persia, wool = .70
: Hamadan: Persia, wool = .20
: Caucasian: Russia, made before 1900 = 1.6
: Tabriz: Persia, with or without silk inlay, kurk wool = 3.0

: This gives you the price per square foot. All you need to do then is multiply the square feet in the rug by the price per square foot and you have a price for the rug. (She points out "The price you have calculated includes the retailer's profit. However, it doesn't mean you shouldn't negotiate a lower price as explained in Chapter 8." Then she points out that "The prices being discussed so far are 1982 prices. Later on I will give you a method for estimating prices for future years.)

: As for projecting prices into the future, she categorizes rugs into three groups: those going up in value at a rate of 35% per year, those appreciating at 20% to 25% per year, and those at 10%-15% per year.

: In the first group she includes (among many) Afghan, good wool; Caucasian, old; Hereke, silk; Saruk, old; Turkish, old, nomadic.

: In the second group she includes (again, among many) in the high range Afshar, Baluchi, Bijar, Hamadan, Heriz - and in the lower range Kayseri; Kelim, Persia; Meshed; Pakistani; Yomud Bokhara.

: In the third group she includes in the high range Agra, Chinese (5/8-inch pile, 90-line), Egyptian, Romanian - and in the lower range Chinese, all other modern; Indian, Moroccan, Sinkiang (Samarkand).

: And that, I believe, pretty well explains her formula.

: -Jerry-

Jerry, thanks for the summary; what baloney! This all might work for a high end urban Persian, but the rest? The part the makes this less-than-credible is the presumed price appreciation. My own reading of auction prices over 25 years says this isn't so, and Hali had definitive data showing that investment in a treasury bond was better than a rug. I think i would reject this formula out of hand. Regards, Marvin

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