Opinions on dealer honesty/dishonesty...

I believe the large, established dealers generally have high standards of honesty and integrity and are so trustworthy that their word is their bond.

I also beleive that there are some slimeball dealers who might try to sell doctored coins without any disclosure or, worse, knowingly offer to sell counterfeit/altered coins. These types would also make lo-ball offers to purchase (read "steal") coins from an uninformed seller (such as the widow who just inherited hubby's collection).

What say thee?

Do you have any specific examples of the good, the bad and the ugly?

 

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My opinion is, that as a group, "large, established dealers" are no more likely to have "standards of honesty and integrity" than other dealers.

 

Good point. I have heard rumors of a longstanding dealer who reportedly has "hung paper" and cycled through bankruptcy a few times and also understand that a major bullion dealer was convicted of a crime a few years ago with resulting imprisonment. This also brings to mind the Ohio dealer who was in hot water over an investment portfolio of coins.

I guess that means there are good and bad apples throughout the dealer community and that "size doesn't matter".

 

I tend to believe the best in people. In my experience, I've found over 95% of people try to be honest. On the other hand, I'm not naive. It is my responsibility to know the item that I'm buying and know the value of it before buying it. If I'm sold swamp land in Florida, shame on me. I hate the ones who seem to whine about being ripped off. It is sort of like saying, look at me, I'm an easy mark, take advantage of me. And someone will.

 

You've learned a great deal in the past 13 minutes.:smile

 

I think most dealers will try to deal honestly with their regular customers who provide repeat business. But it is the nature of the business to haggle over price and condition. If someone isn't a good-to-great negotiator with skills roughly equal to the dealer, they will come out on the short end. Is this ethical? You be the judge. And then there are dealers who will cheat the customer, as one did to me when I was a kid first buying coins. Luckily, I didn't have a tremendous amount of money back then. One dealer near me offered me $6 for an ASE when silver prices were around $13. This was my first time in the store, and needless to say I didn't go back.

 

I always thought it would be interesting to conduct a hidden camera investigation of coin dealers. Let's say a little 'ol lady walks in to the neighborhood coin store with her deceased husband's box of Morgans in 2 by 2s that are sprinkled with goodies like a '93S, '94' '89CC, etc. I bet some dealers would offer her melt for the lot, while others would point out that she has some scarce dates and offfer a decent price.

That would be interesting, wouldn't it?

 

You are referring to Thomas Noe, former Ohio coin dealer, who managed a $50 million account for the Ohio Bureau of Workers Comp. Noe invested most of the money in rare coins but stole some of the money to finance a lavish lifestyle. He is currently serving an 18-year sentence at a state prison in Ohio.

So was Noe a dishonest coin dealer or a dishonest investment fund administrator?

 

Always an interesting question and the answer is there are honest and dishonest dealers. Kind of like sellers on ebay but at a different level shall we say.

I've worked at a shop for just over a year now. I was a long time customer there beforehand and still am.
As I got to know my boss better over the years I got better deals. It works like this in a lot of shops. Know your coins and they respect it.

This is really important if you sell to a dealer. How organized one is means a lot from our side of the counter believe me. Bring in a jumbled mess and it takes time to sort. We want to buy but we don't want to do free appraisals. Some can't wrap their brains around this concept.
If your collection requires us sorting we tend to separate stack and make offers for bulk.

Bring a bunch of coins to us in 2x2s and it's a different story whether or not the seller really does know anything about coins. For example, if you bring in a bunch of Morgans and we notice three are CCs we will indeed offer much better money for those coins. Easy to spot and we want those coins. We will, in turn, make money and since it's a business we need to do this. I like getting paid on Mondays because the boss made money.

The more one knows the better they will do when selling is the bottom line.
This works for buying as well.

Obviously doctored coins we sell much cheaper. Still, I point this out if someone inquires about it. Knowledgeably buyers don't need me to do this most of the time.
We want your repeat business so honesty goes a long way in a brick and mortar.

I will bring up one area where dealers so often get a bad rap and it involves bulk buying. We do it quite often at work.
On occasion we will find a semi key or key date in a batch we bought as bulk. Believe me we do NOT search every coin that walks in the door. I figure he's sold enough coins bulk and had someone else find keys.
We currently have about 100,000 wheats. I only look through small batches and take a glance at larger batches. Not enough time to search them.

Junk silver is the same unless I have a "gut" feeling.

My best finds to date are a 16-D Mercury dime and very recently an 09-S Indian Cent and 12-S Liberty nickel from the same batch of bulk.
The Mercury came from a batch of over 900 coins we bought late in the day. I noticed the wear patterns and decided to take a closer look the next day. My time cost my boss money and it paid off. Usually it doesn't.

I found the other two while sorting out culls from G-VG coins. Several hundred and I always check 1912 V nickels and 08 and 09 Indians. I doubt I'll ever find two coins like that in one day again.

I actually posted about this on a few other forums but not here on CT because I didn't feel like having people tell me I ripped someone off because I didn't. One poster on another forum implied it was my "civic and moral duty" to check better when buying.
Sorry, it's not. You see that boils down to free appraisals.
NOW had the seller broken down and bought a Redbook etc. (which we sell) we would have paid much more because he would have isolated these coins.

It may sound brutal but my boss will make money on these and that helps pay my wages. Hey, I still buy from the boss knowing full well what he paid and he still makes a profit. Granted I tend to get better prices but if he wasn't there to buy these coins in the first place I wouldn't have access to them.

One more point that people should understand. If a seller walks in with a coin that we already have 1000 of we're not going to pay much. We don't really need them. You'll make more money finding a buyer that really wants them.
Bring in a coin that we know we can move and you'll get much better money.
Supply and demand.

I think I'm done rambling for now.

clembo

 

My dealer does the same thing. And you did nothing wrong - just like tellers who pull silver out a drawer. Know what you are doing first.

 

For the most part, on the bourse, the honest, hard working dealers with superior skills seem to prosper. Busy dealers on the bourse I would say tend towards the honest side. On Ebay and in the magazine ads, it isn't always so fair.

Size doesn't have much to do with honesty. Some of the biggest dollar volume dealers are telemarketer firms that sell coins for triple what traditional dealers charge, using high pressure tactics skewed towards investments. Some of the dealers with the worst quality and many problem coins, are those with a combination of multipage magazine ads and seemingly ultralow prices.

I read a lot of stories online, and some have to be taken with a grain of salt. Some stories have an element of truth, some are one-sided versions, some are made up completely. Anyone can say anything online. Dealer bashing can be a popular sport.

As an example of a story that might be taken the wrong way, here is one I overheard at a show. A dealer bought an album of Morgans for what many would call an absurdly lowball price. The rest of the story was every coin in the album was re-engraved with a knife on the reverse. Someone only observing part of the story, what coins where purchased and the obverses of the coins, might conclude that the dealer is a skunk. Those who saw the entire story could understand why the offer was so low.

What some say is dishonest is just a wide spread between buying price and selling price. Some naively expect every dealer will treat every customer the same, and give every customer the same deal. When some folks see that they aren't getting the same deal as a loyal and long time customer, some cry foul and play the dishonesty card.

A few folks seem to expect dealers to be charities and work for nothing, and those that charge 5% more than someone else to be dishonest.

Like I said, dealer bashing can be a popular sport. Much of the time it is unwarranted. Dealers are in business to make money. A few make a very good living. The top dealers can afford two Ferraris and then some, if that is what they choose to spend their profits on.

 

There are plenty of skunks around, especially at brick and mortar shops, pawn shops, and hotel room buyers. There are even some on the local bourse, a few that may even wink at each other if a fish walks in to a local show, and then split the collection when both or several dealers all agree to low ball the novice seller. As a percentage that is hard to say.

Unless the time was the early 1960s, buying Morgans and Walking Liberty halves at face value seems like a total ripoff. However, I don't know how true that is, or if there were any other strange circumstances behind your story. As I said, anyone can write anything on the Internet, and I have no way to verify anything anyone writes. If true as presented it was a total ripoff and a dealer that I would avoid, no matter how nice they were to me, but that is just me. Someone that rips people off that badly, is likely looking to rip me off just as bad, if they see the chance.

So I agree there are also dealers that are nice to their regular customers, but will rip a novice when they see a chance to do so. Hard to say if the term "honest" applies. I guess, it depends on how big the rip is. As economic times get worse, the rips will likely get worse. Some dealers are hungry, and when someone is hungry, they will sometimes do anything they can get away with, even if it means offering 10 cents on the dollar, if that means their kids get to eat that week. I'm not saying it is right or ethical, it just is.

That said, some novices get upset when they have common coins for sale, and then see better dates in high grade being sold for 10x or 100x what the dealer offered for their common junk coins. It is easy enough to skew such stories, and then misplace a fact or two upon repetition, and make the dealer in the hypothetical story look like a skunk when he/she may be one of the good ones.

Folks will have different definitions as to what a fair profit margin is. Many have that profit bar set so low, that very few dealers would qualify as honest. For ballpark numbers, 100% profit over cost is common on low cost slow moving common items such as common wheaties, buffalos and the like. 30% to 50% is common on moderately priced collector coins in the $20 to $60 range. 10% to 15% is more common on items over $100+, higher demand items. 3% to 5% might be common on high volume, high value bullion items. Obviously, some dealers might charge more, or less, or offer higher or lower, depending on their volume, their expenses, their profit expectations, their customer base, but these are ballpark numbers.

Some dealers will clear things out at 5% or at cost, but usually only to their best customers. Wholesalers and bullion dealers tend to work on thinner margins, and move more merchandise, but not always (telemarketer bullion/investment dealers have some of the highest markups in the business).

 

Are you talking about profit or markup? Markup covers overhead expenses and what is left is profit.

 

Markup. A coin bought for $1 sold for $2, 100% markup, a coin bought for $20 sold for $30, 50% markup, a coin bought for $500, sold for $575, 15% markup. Profit is after deducting expenses.

Anyway, just some ballpark numbers.

 

I wasn't there, neither were you. Of course you believe your friend's account. However, if he/she doesn't know anything about coins, there is a chance that he/she misheard what the offer was. For example, the offer might have been: face value for all the common wheaties, 2x face for the old nickels, 4x face for the silver, 5x face for the Morgans, but because the person is so irate after hearing the first sentence, all they remember hearing is "face value" and that is the story they retell to their friends. I have heard a few stories about offering face value for Morgan dollars, and would say it is more likely for a pawn shop. For a coin dealer, offering face value for collectible Morgans would be an exceptional case, like in the lowest 1% of dealers. If the coins were authentic, certainly that dealer would not be considered as "honest," and would be a dealer to avoid entirely.

Let me add that everyone on Internet forums tells me their stories are 100% true, especially their dealer bashing, or collector bashing stories. In a few cases the other party to the story is also a member of that particular forum. When there is some kind of dispute, and both sides of the story are told, I'd say about 80% of the time, the first story posted isn't close to the truth at all. So it would be interesting to hear the dealer's side of that particular incident. Though if the story is true, the dealer is likely hiding under a rock like the snake that he/she is.

 

Whadda' you folks think about my idea for a "sting"?


I always thought it would be interesting to conduct a hidden camera investigation of coin dealers. Let's say a little 'ol lady walks in to the neighborhood coin store with her deceased husband's box of Morgans in 2 by 2s that are sprinkled with goodies like a '93S, '94' '89CC, etc. I bet some dealers would offer her melt for the lot, while others would point out that she has some scarce dates and offfer a decent price.

That would be interesting, wouldn't it?

 

Yes but we already know how it would turn out. If you take the collection to three dealers, one will try to steal them for melt or face value, one will make a lowball offer, and one will honestly tell her what they are worth and either offer to buy them for a fair discount or offer to sell them for her on consignment for a fee.

 

Meethinks you are making assumptions without any basis. I wonder what type of offer our widow would get if she answers one of the full page newspaper ads to met at the local motel for a quickie (offer, that is)?