Several years ago my grandmother died. One of my duties was to help the family with cleaning out her house. She was 95 years old when she passed and had possessed a lifetime interest in antiques and collectibles. Her spacious, two-story brick Victorian house was absolutely crammed full of old things – too many old things in fact.
My grandmother had been a young adult during the Great Depression and the experience of that traumatic period stayed with her for her entire life. As a result, although she was not a hoarder, she never threw out anything useful. It didn’t matter whether it was a gift, or an item she had picked up at a church bazaar or even something she scavenged from the neighbor’s trash – she kept them all. She even went so far as to clean disposable plastic silverware and carefully sequester it for a future use that happily never came.
So you can imagine how monumental the task of cleaning out her house seemed. And yet, mixed in with the apprehension was also a vague sense of excitement. This was going to be the biggest treasure hunt I had ever participated in. There were hushed whispers among family members of the possible value of the antiques in her estate…$30,000…$40,000…more? No one knew for certain. All we did know is that she had a house crammed full of a lifetime’s worth of antiques, collectibles and stuff.
To make a long story short, while the emotional value of what we found was tremendous, the dollar value was much smaller than expected. The aggregate value of the house’s contents was between $8,000 and $15,000, although that number would have been higher if the economy hadn’t been in the midst of a severe recession. In the aftermath of these developments, an interesting concept related to the Pareto principle became evident.
The Pareto principle, or 80-20 rule, was an idea conceived by Italian economist Vilfredo Pareto in 1896. It states that 80% of an effect originates from 20% of the related inputs. The Pareto principle is often found in business situations where, for example, 80% of a company’s sales might come from 20% of its products.
What does the 80-20 rule have to do with cleaning out my grandmother’s house you ask? Simply put, I discovered that approximately 80% of the monetary value of the contents of my grandmother’s house was concentrated in 20% of the antiques. Only a small proportion of her antiques had significant dollar value.
For example, most of the value came from a few specimens of mid to late 19th century Victorian furniture, the good sterling silverware, a couple pieces of fine jewelry, a single gold coin and perhaps a handful of glass and porcelain pieces. While there was a lot of stuff in the house, most of it had either very limited or no value, other than sentimental.
The loss of a loved one can be an overwhelming event, but liquidating their estate can be a little easier if you understand Pareto’s 80-20 rule. In the case of a random accumulation of antiques it is a pretty safe bet that 80% of the value present will be concentrated in 20% of the items. Concentrate on making sure you understand which 20% of the items have the value and don’t let them slip through your fingers out of ignorance.
This will limit any “value leakage” from the estate. Keep in mind that this 80-20 rule will not apply if the estate consists of an organized collection of antiques, rather than a haphazard accumulation.
