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Cellar valuation for the purpose of Probate

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16 May 2017
Cellar valuation for the purpose of Probate
A private cellar
A customer of ours recently conducted an experiment, offering several cases of his wine to the market for valuation, with a view to selling. Unsurprisingly he received offers that varied by over 20% from lowest to highest offer. When I first heard of this I remarked that it was a surprising spread in price offered but when a colleague suggested I gather quotes for a conservatory to be built on my house and see how those like for like quotes came in. I got the point. Nevertheless it did get me thinking. There is little doubt that for many wine investors and collectors the release of their precious wine is the moment when their paper profits are aggressively eroded. Even with a sympathetic broker (or alternative route to market) transaction costs are high if you want a quick sale. They may take the form of a buyers discount, auction fees or some other. And as wine is oddly quite illiquid and provides no passive income while you own it (and don’t get us started on insurance or storage costs) the amount you can comfortably “give away” is often much smaller than anticipated.

We at HarperWells are often approached to help in matters of probate or, in some cases divorce settlements. In most instances the immediate requirement is for an accurate market valuation. Various factors come in to play. The primary factor is the nature of the wine collection itself, namely how desirable are the wines. Hot on the heels of this consideration is how have these wines been stored? – this is the “one careful owner” requirement. Have these wines been stored well and are they in fine condition? Maybe, hopefully, they have been stored under bond since purchase – the gold standard in valuation considerations. If we can accurately gather this information from the interested party then valuing correctly for probate is a quick and low cost activity.

After a valuation has been calculated we may then be instructed to find the best price for the collection or in some cases we’ll make an offer ourselves. An advantage of working both broking and retail platforms is that we have customers for an extremely wide range of wines. We recently bought a parcel of wines that include First Growth Bordeaux, right through to some quite inexpensive and simple Beaujolais wines. We quickly found enthusiastic customers for both of them. However, in some instances a collection maybe so niche or esoteric that we’ll have to act as an agent for the executor and work on their behalf to find the quickest and/or best price available. Sadly, in these particular instances the wines rarely reach what we’d call an optimum value, in the main because the purchasers know that sales will take some time, may eventually be heavily discounted and above all, will tie-up working capital for far longer than they would like.

In summary though, cellar disposal, whether it be for probate, due to a divorce or other change of circumstances should be a quick and straight-forward arrangement, taking no more than 6 weeks from commencement to conclusion. In many instances though, much, much quicker.
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