If we’ve heard it once, we’ve heard it 100’s of times … this is rare and so it’s valuable, right? There are no 1964-D Peace Dollars known to exist — and thus if one surfaced, there would be tremendous demand to own and thus some value.
But what about that picture of your grandfather standing on the beach in Hawaii in 1936? There’s only one of these pictures so it too is very rare, but is there any value? Not necessarily.
[Market] value is a function of both supply and demand. Less supply than demand and prices of such property tend to go up and less demand than supply and prices tend to go down.
So what about items with extremely low supply — wouldn’t they all be valuable? They would, so long as there was some demand greater than the supply. However, if there is limited supply and even less demand, there may be no little or no value.
We previously wrote about the “value characteristics” here: https://mikebrandlyauctioneer.wordpress.com/2014/05/27/auctioneers-and-d-u-s-t/. As such, there are two other factors beyond supply and demand which effect value: utility and transferability.
In essence, utility speaks to demand — without any utility there is typically no demand, and transferability speaks to supply — without the ability to transfer, there is typically no supply.
A recent client of ours pointed out that a particular piece in his collection was extremely rare and remarked that it should fetch a good price … and I countered that it was certainly good news that there was limited supply, but asked him, “Who would want this item?” He replied that he didn’t know anybody …; thus we might actually have had more supply (one) than demand (zero.)
Lastly, it is held that all real property is unique (supply of one) but is some real property worthless? Rarity in the auction business is good news when it comes to value, so long as there is demand as well.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.