The Deal With Dealers

Hi CoinTalkers--

First time poster here! I have a question about your experience with dealers. For years, I've been buying coins (almost) exclusively at auction. I figured that it would be hard to go wrong as long as I was only paying a token amount more than the second-highest bidder. Recently, I liquidated part of my collection at auction as my interests have changed and I was surprised at how wrong I was. Granted, collecting is not an investment to me and my goal is not so much about money as it is about appreciating the artistry and getting an aesthetically beautiful collection, but I was stunned to see a few pieces sell for as little as half what I paid at auction and wondered if I'd been mistaken about my assumption that auction prices are the fairest prices.

So, I decided to try out a local dealer that gets great reviews. I did my homework beforehand. I walked in knowing exactly what I wanted to see, I studied the price range for comparable (both aesthetically and technically) coins at auction and decided on a target price roughly 10% less than the median auction price on the theory that I was doing the dealer a favor by buying a coin at private sale and saving them from auction fees.

Maybe I'm a sucker, but I was blown away. I asked about the prices and immediately the dealer offered me a price about 5% lower than my target. Feeling like I didn't have any more ammunition for negotiation being that he immediately offered me a better deal than my goal even, I walked out with two new (gorgeous) coins half an hour later, a satisfied customer. At this point, I'm not even sure that I'm inclined to go back to Heritage. I thought the prices the dealer offered were absolutely fair and I enjoyed the conversation and learned a few things in the process.

Should I have asked for a better deal? Come back in a few days? Or, is it not necessary to take such an adversarial view of things, and assume that the dealer wishes to build a relationship with a likely repeat client?

 

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Glad you had such a positive experience! I took 5 low grade large cents to sell to a dealer I had dealt with several times in the past recently. My usual guy was gone that day so his partner who I didn't know looked at them. He offered me $32 for all 5. I said no thank you as I had paid $73 for the lot. I took them down the street to another dealer I know. This dealer offered $95 for the same coins. Moral of the story is know who you are dealing with and know what you are selling!

 

Auctions are a fickle beast. The market just changes over time and you may have actually gotten good prices for the current market but impossible to say without knowing what it was and seeing the listings. Timing is often the biggest thing when it comes to auctions on whether or not something is in demand. While its true someone before was willing to pay almost as much as you, you still need to people that really want something the next time around or the lack of an under-bidder can drastically change the price without reserves.

Generally speaking if you can sell locally for spitting distance of the auctions it is faster and easier to just sell locally. Somethings this is easier to do with then others and you may end up noticing somethings have very different in person and online pricing.

 

Wow man that's hard to follow. Try researching active prices of your target coins before you shop.
I buy from auction & from dealers. Stay in control when your offering a price to buy. And don't drive up the bid when buying from an auction. Do your research find the coin in the grade you desire & fluctuate on the price fitting your set goal. There's no need to over spend how ever your buying your collection.
As far as resale your coins are only worth what a buyer is willing to spend at any given time. Today it could be more, to marrow less. Sometimes you just never know.

 

The issue of bidding emotionally on auctions is actually one I did research on at a past life. I won't say exactly what the application was, because you might hate me.

I have my own idea of what the price for a coin should be at auction and I bid exactly once at exactly that price. If other people wish to bid higher, they're welcome to have the coin. Unfortunately, this has led to some coins in particular becoming out of my reach because there always seem to be a ready stream of buyers paying indefensible sums for gold in particular. This is part of what led me to a dealer, because I figured that if I could get the dealer to sell me the coin at 80-90% of a median auction price, then I'd actually be paying what I want to for something that keeps going (in my opinion) too high at auction.

I do have another question for you, though. Is it common for a dealer to decline to purchase slabbed coins? I brought in a piece that I might hypothetically have traded in because I wanted to use it as a litmus test for the dealer's margins, and two of their staff looked at it and said, "The color of this is questionable, and this isn't something that we'd generally pursue." This coin was slabbed PCGS MS64+, so I thought that was pretty remarkable until they showed me some coins they had in the back that were in PCGS plastic as problem-free that were either cleaned or vastly overgraded. I know you're supposed to buy the coin and not the plastic and so I generally buy based on aesthetics more so than the technical grade, but in the past I've generally trusted the expertise of PCGS and NGC regarding whether something is cleaned, altered or counterfeit because I don't feel confident that I can reliably detect these issues. Is it really such a common problem for altered coins to be graded as problem-free by PCGS?

 

That's an area where specific coins would need to be discussed but top quality coins for the grade generally fetch higher prices except for the most common things in common grades.

It's not uncommon for them to shy away from coins they feel would be hard to move or they just don't have the customer base for especially with smaller shops on individual purchases. As for if it is common or not it really just depends on the dealer. Also sometimes they will decline to make an offer instead of making an insultingly low one if they they know they would have to sell it dirt cheap to their customer base.

 

I myself have a few dealers I personally have met here from CT that I buy my scarcer, higher end coins. Higher end for me. I am no Hugh I go to my LCS's for common stuff as SOME of it can get cheaper than on ebay, but not by much.

The trick is finding a price you are comfortable with and sticking with that. It takes some searching. LCS's, ebay, etc.

 

Markets change and emotions can run high at auction. This cuts both ways. The term crapshoot is spot on.

As to not negotiating for a better price than the first one given at an lcs... That's crazy talk! Life is a negotiation. If you know you'll take it at that price try getting it lower. A seller always expects to negotiate so why shouldn't a buyer

 

The coin I was thinking of trading in was fairly high-end merchandise. This dealer is big enough to be on the dealers list here at CoinTalk, so I thought it would have been worth their effort. The thing is, while I was in the store at least, there was one person selling a collection and literally everyone else coming in was to buy silver. So, it could be that their clientele prefers either higher end merchandise than my wife allows me to deal with or just a pile of numismatically uninteresting silver!

 

I absolutely agree. What would you have done in my position? I knew the price I wanted to pay coming in, I knew the asking price, and I had figures to back up the price I wanted to pay. When I commented that their asking price was kind of on the mid-upper range of what I'd expect to pay at auction and he immediately dropped the prices to 5% below my goal price, I was pretty disarmed. How much do you typically try to knock off a dealer's asking price?

 

I would have just taken it like you did, he already dropped lower than what you you wanting to pay for it, which is good. Now in the right place negotiation is good. For example he has a coin that is right as guidebook price, but it has a few blemishes offer him something lower. But if you have a set price you are willing to pay and his is lower, why battle when he could potentially raise the price again.

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Negotiating is more art than science. If I were you I would have said something like "how about 20% instead of 5 on this one (and settle for 10%) and I'll be coming back in soon" that sets the tone for future negotiations and let's the owner know you'll be back. However I wasn't there and being able to size up or "read" the opposition is key in negotiations. It takes a skill level that only practice and time can teach you so I suggest always negotiating from here on to refine those skills. They will serve you well beyond just buying and selling in life

 

Well, you guys are lucky, some of the LCS's won't negotiate anything around these parts.

 

How does he know the buyers set price? That's rule 1. Always keep your cards close to the vest

 

Yeah, that's where reading the opposition comes into play. Some people just won't negotiate. Buy or don't then... On to the next

 

They had actually posted asking prices for the coins I was interested in on their website. I'm pretty picky and will take a technical AU without distracting marks over a technical MS with distracting marks in the field, and will not buy something that I consider unattractive no matter how good a deal it is. I'd cherry-picked the ones I wanted from their inventory online as coins that I thought were aesthetically beautiful for the grade, and in fact when the guy brought out one of them another partner remarked, "Is that the right price? I think that's an old price." I was actually concerned that if I negotiated too hard he'd check and realize that the same coin in the same technical grade with less face-meltingly beautiful toning was selling for 50% more than the asking price at auction already, and I got it 10% below asking anyway.

 

That guy was probably a shop friend lol. I'm just giving you general pointers here. Remember, it's more of an art

 

It's absolutely possible. I don't have a ton of experience negotiating with dealers, though, and my normal negotiation strategy is just to lay my cards on the table and explain what facts and data I'm basing my position on. Generally, I find people are very receptive to a properly researched argument. I'd love to hear any advice you have that I can apply going forward, but "always negotiating from here on" is not very actionable feedback. Maybe you have some specific pointers?

 

Very well could be most of their business right now is silver. Prices are weak on a lot of things at the moment. Only they know the real answer but unless you sell a collection and stipulate everything must go I'd imagine it's fairly rare for shops to be interested in absolutely everything that walks in the door. Doesn't mean it's a bad coin, just may be a bad place to try and sell such a coin.