If you’re anything like me, you probably don’t like it when things happen behind the scenes in business and you’re not quite sure what’s going on and how things work. In this case, a watch business appraising a watch before potentially buying it.
I want to see if I can shine a light by explaining my personal process in a bit of depth. In an ideal world, any watch that I buy will sell quickly, for a good price and I will make a fair and reasonable profit margin. In order to be able to sell great watches, I first have to buy great watches.
But how do I make that happen?
What factors and necessities come into play when I appraise a watch to see if it makes financial sense for me to purchase it with resale and profit making in mind? How do I avoid buying a watch that will take a long time to sell and when it does eventually sell, gets price-haggled down to the bone like the buying of a cheap rug on a desert market stall?
As a watch-pro, if I do a great job with my buying I get to make a few pennies. That’s the reality of the watch businesses. To make a profit on the watches they sell.
The three main factors that I need to consider are
- the watch….
- the market….
- the expected “buy price” of the watch from the seller.
The first thing I need to do is get to know as much as I can about the watch being sold.
In order to appraise the watch, I will need:
- Basic Details of the watch – the brand, the model and the reference number.
- Some pictures of the watch and any accessories that it comes with (box, papers etc). The more pictures and the more detailed, the better for me.
- The year of the watch.
- The condition of the watch and the strap/bracelet.
- Does the watch come with its original box and original purchase papers?
- If it’s an older watch – when the watch was last serviced?
- Is there any service paperwork?
- Have you had the watch from new?
- Does the watch function as it should? Does it keep good time? Does it work properly? Does the date / Chronograph / GMT function (or other complications) all work
Finally, what sort of price is the seller hoping to get for the watch..?
Once I’ve received this kick-off information I need to start digging a bit deeper with my due diligence and research. I’ll start looking at the watch’s place in the current market. Here I will look to see if it is a watch that is “In Demand”. Is it a watch people are interested in? Do people care about it? Is there demand for it? A watch that is interesting and in-demand is better for me as it will most likely sell faster.
If you’re a watch enthusiast reading this then you will probably know WHAT the more in-demand, sought after watches are. Is it an iconic watch.? A classic? A rare watch that people hunt down and seek to buy? Or something a bit more run-of the mill? Maybe it’s a watch of an acquired taste? Perhaps a little leftfield? All this needs to be taken into consideration.
Next, I’ll check out the “availability” of other competing watches in the market. Are there any or many around in my country? Or just a few? What about in Europe? Or the rest of the world? Since Brexit, importing watches to the UK from around the world has become more expensive with the addition of VAT import taxes. So, there has been more UK to UK trading with less imports coming into the UK. If there are lots of the same watch that I am looking to buy available in the UK, that is not so good for me.
If there are loads available around the world, also not so good as many UK buyers will be put off by the importing process and procedures from international sellers. They will only look at domestic availability for a faster, less-hassle purchase.
If there are some of this same watch around in the UK, are they nearby to where I am? Or far away? Many people prefer to buy locally and like being able to pre-inspect the watch. They also may prefer to pick up or have the watch hand delivered – especially if it has a higher price tag. Taking into consideration import duties, sales taxes and delivery “RISK” the fewer watches available on the market, the better for me. Even better for me – if the ones that out there are available are located far away.
Then we need to look at the watch itself.
The four important physical factors to consider to gauge how quickly your watch will sell, how much profit I can make and what price I need to sell it for are:
1. The condition of the watch (aesthetically and functionally)
2. Does the watch have its original Box / papers?
3. Has it been serviced recently? Any service paperwork? I like to know who serviced it too.
4. And of course very importantly – Your wish price! How much are you hoping to get for the watch?
Once I know this, I enter the data into my little “risk” point scoring tally where I mark each contributing factor with a score of 1-5 – with 1 being poor and 5 being excellent. This is done using my industry knowledge and sometimes doing a bit of research/homework, if the watch is not that well known to me. I then tally up the score and see where we are. My risk assessment might look something like this….
- Top marks = 20 points (This is seldom achieved)
- Great = 16 to 19
- Fair = 12 to 15
- Risky = 8 to 11
- Very Risky = below 7
Ideally, a watch will be 12 or higher.
When researching the market, I will always try to compare against other like-for-like watches; similar year, condition, box papers, location and evaluate the pricing spread of the competition.
Hoping to then arrive at a concluding decision making stage of:
- How hard will your watch be to sell? Will it be easy or difficult?
- How long will it take to sell? Will it sell quickly? Or take ages?
- How much profit can I make from the watch?
- The opportunity cost?
- In buying your watch, what other purchases am I possibly missing out on?
As a smaller watch business, cashflow is a very real situation I need to factor in. Bigger watch businesses won’t need to worry about it as they will most likely have more working capital available to purchase new stock. A watch professional should also conduct proper background checks and due diligence on the provenance and integrity of the watch they are looking to buy to be sure all is ‘above board’. Has the watch come to sale from ethical means? Does the seller have the rights to sell the watch? Are they the legal and rightful owners? Has the watch been checked for sale with the Watch Register? Has it been reported lost or stolen?
All the above affect my purchasing decision making.
It can sometimes be a little uncomfortable making offers on watches, especially when taking the sellers “wish price” into consideration. Many sellers – and rightly so – will be doing their own market investigations and seeing the over-inflated pricing on some of the big marketplace platforms out there and think that this is the “going rate” for their watch. However the reality is quite different. The “advertised or listed” price is not the same as the “sold for” amounts.
I often find – especially with Rolex, Patek and AP buyers – every seller is very business minded and has an entrepreneurial spirit so they have their finger on the pulse in terms of the value of their watch and they know what their watch is trading for. When it comes to me offering a direct BUY PRICE – there ARE two opposing forces at play – like two magnets repelling one another. That is…. “ I want to buy as low as possible – whilst being fair and understanding towards the seller”. Whilst the SELLER wants to sell for the highest price possible – for obvious reasons. I honestly don’t enjoy managing these opposing forces as it can sometimes create bad feelings.
With many watches available on the market, pricing is quite “alive” meaning watch pricing bobs up and down, a bit like commodities, Foreign Exchange and even gold. Market pricing changes quite often.
It ebbs and flows from low to high price points as
- Supply and demand for watches fluctuate.
- Watch trends and interests change.
- Global news or company news makes the headline.
- Watch Influencers give their opinions.
- Social media views create change in the market (positive/negative).
- Watches become more scarce and availability decreases
- A watch model becomes discontinued.
I will often need to explain that I am a Trade buyer and you are asking for – and hoping to get – Retail prices or “end-buyer” pricing. Ideally they would like to get that inflated list price from a dealer. However that is not the reality and in this situation, I will suggest they probably need to try and find an end buyer directly and sell directly.
This is where I will politely decline the purchase offer and either wish them luck or offer to work with them in a slightly different selling format where they ‘consign’ the watch to me to sell on their behalf. Also I will remind them of the role and responsibilities of the Watch pro and also explain all the internal business matters. I explain the reason for the price that I offered, and try to validate it by explaining that out of my profit margin comes lots of business expenses and that trade dealer margins get eroded very quickly.
Often when advertising the watch for sale on the open market, there are a lot of time-wasters and the person selling their watch will need to deal with the end buyer – and not knowing who that person is, can sometimes open the door to a little risk.
There are quite a few options for sellers wishing to sell directly to buyers – with some big watch marketplace websites like Chrono24 and eBay – who now have their Watch Authenticity service to help take much of the risk out of the online buying process. There are pro’s and con’s to dealing with a trade professional and likewise there are to selling directly. My job is often helping sellers to figure out what is best for them and then guide them down the right path.
Their safety and happiness is more important to me and as Muhammad Ali once said “Service to others is the rent you pay for your room here on earth.”