Dragons, Diamonds and Documentation. Keep Your Records.

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Do you believe in Dragons?  I don’t but had the opportunity to see one or at least the closest thing to a Dragon I will ever see.  A few years back the opportunity presented itself to help a collector with their collection and he was an avid collector of fossils.  Some of these prehistoric fossils are pretty awesome especially with how well the details are preserved in time.  In particular he had this one skull that was pretty big and it looked just like a Dragon. I am telling you it was something that would be in a kid’s movie and the accuracy of the fossil and our perception of Dragons was identical.   Not sure what type of creature it really was but I do know that it would have been a hit for Halloween for my 6 year old. 

The collector was adamant that it was worth $500,000 but he did say he got a good deal through his source.   Now what someone thinks something is worth and what they paid can be different numbers however when valuing items for insurance or fair market value, there is a process to substantiate those numbers. The simple request of supporting documentation for the purchase of this 6 figure object was unable to be fulfilled because there were no records.  (Sure, some objects that people collect don’t have a paper trail, like buying rugs when you are traveling through Turkey or a friend of a friend of a friend hooked you up with the last painting from a famous artist through an estate sale… more on this later.)  So we have Puff the Magic Dragon that needs to be appraised and now we are relying on available data, expertise from individuals and any comparables in the marketplace. 

Example #2:  You bought your wonderful wife that 10 carat diamond.  You spent around $750,000 or more depending on the brilliance and WHERE you bought it.  Now the insurance company is asking for updated appraisals and you cannot find the receipt or GIA certificate.  You do remember that you bought it from the highly reputable jeweler in Los Angeles and you think they may have some certificates or documents but you would need to find out.  Now $750,000 may or may not be a lot of money and keeping records about those purchases can be important to you or not, however your record keeping can make life a lot easier.

Here is the big problem:  the majority (over 90%) of client’s record keeping is lacking, disorganized or simply lost.  When we talk about record keeping I am referring to their files of receipts, invoices, provenance, or any other documentation that supports their purchases.  In plain terms they cannot easily access these documents and rely on traditional record keeping practices or worse rely on others to keep copies. 

So why does this matter?  If we specifically address appraising, the ability to support your collection and valuable articles with documentation will help the valuation expert make the research process efficient and not make the client pay for extra time to track down and prevent delays in getting values which translates into more costs for the appraisal.  The benefits to the client when supplying documentation are:

*accurate valuations that may help substantiate the purchase and investment

*enhance the support in the event of a claim and make the process seamless

*efficient appraisal process

Typically, clients have banker’s boxes or file folders of old receipts.  If they are active in their collection management, these files are well organized and even digitally scanned.  At Asset Archives we often see clients who cannot easily access these documents or it is a painful process to do so which leads to their next assumption that the decorator, gallery, jeweler or their advisor can access the document(s).  Bad assumption. 

So how can this be fixed?  Ideally, in the digital age, store document files (emails and receipts electronically) or scan hard copies and keep them safe on your computer.  Keep this information readily accessible so you can share it with your advisors and you can access it even if you are not in your home (imagine if the house burned down? The PC is gone.  Did you back it up and keep it off site?)  If you are completing an inventory of your home’s contents or getting appraisals, ask if the firm you are using can digitize any pertinent and relevant documentation so it can be added to the inventory or appraisal.  Or, use a solution online that can make the information available at your fingertips through secure web access.    Asset Archives is happy to provide more recommendations if you would like to get professional advice.  Please feel free to call us at (888) 784-6630.

At the end of the day if you are buying Dragons or Diamonds, keep your documentation.  It will serve you well and make life easier.  Thing happen to the places and people you bought things from like they go out of business, move, lose files, change ownership and more so make sure you are on top of your documentation.