Negotiating for a coin in auctions, and from dealers (US coins particularly).

I am sure that this has come up before, but wanted to start a thread on the negotiation process for getting coins that are "Buy it Nows," and "Best Offer" situations, on eBay, Heritage, David Lawrence, and a number of other popular sites. The process differs, but the basic principles are remarkably similar. This came up on a Morgan dollar post, and I figured that I wanted to invite anybody who wished to put their "two cents" into how they acquired coins by negotiating.

1.Know the fair market value of the coin(FMV). This can be obtained in a number of ways--from the greysheet, from previous sales at reputable auctions, and to a lesser degree, from price guides (they tend to be high retail, but offer a high ballpark).
2.Know the coin. It helps to have experience in knowing the details of the series, and what is or isn't desirable. When dealing with specialty and toned coins, that is particularly important, as rules go out the window, sometimes, and so do prices. Examples of this can be, but are not limited to: Key dates in demand, Prooflike Morgans, Toned Coins, DMPL Morgans, varieties, errors, Vams, etc. Know your coins, and read about them.
3.Learn to recognize nice coins from photographs. 80-90% of auction or best offer purchases are for sight-unseen coins. If you're buying from a show or coin shop, that isn't an issue--knowing the dealer markup, and if the coin is raw, knowing how to grade is crucial.
4. If you are going to bargain, have your resources in front of you. For example, know what PCGS Price guide says, and have it open on your computer or phone. Same goes if you are a greysheet subscriber. Join Heritage and David Lawrence, and other auction firms so that you can see previous reasonable sales. Having ammunition makes it possible to say: "Hey guy, do you know that the greysheet retail on your coin is $175, and you are asking $275. Is there any possibility that you can do better? When I make an offer, it always includes a message to the seller as to my intent to a) be serious and buy the coin if my offer is accepted b) shows that I know the FMV of the coin, and c) know that his price is unrealistic.
5. Lowballs---some folks love to smoke out true asking price by lowballing as an initial offer. I don't do so, as I think that it discourages many sales, and closes the door to further negotiation. Others like to offer a really low bid to elicit a counter to see if there is significant negotiability. That depends on being polite, civil, and keeping the door open. Remember, you could just as easily be a seller, rather than a buyer. While it is business to negotiate, always do it in good faith. I personally DO NOT like lowballs, having been on both ends, but whatever you do, offer sincerely, and politely. Respect the other person's point of view.
6. The crucial part of any negotiation is the counteroffer. If a transaction has gotten as far as the counteroffer, it is fairly likely that a deal may be consummated. Consider how much you want the coin, and what previous sales are. Is the coin unique, or extremely attractive, so as to command more than the normal sales price? This is the point where real skill is needed--you attempt to find a comfortable place for the meeting of the minds. Remember, that if it is a reputable dealer, you want to do repeat business. Victory on one purchase should NEVER replace a relationship with a good dealer who wants to be fair to his/her customers.
7. if negotiations show that the seller is "emotionally or financially invested in the coin," read that as minimum negotiability, decide if you want to be emotionally invested in the coin. Decide if it is worth paying more than you desire to do so, or that you have planned. This is key in high ticket coins--many dealers do not have much "wiggle room," as they may have paid well for the coin, and have a lot invested in it. Once again, polite messages in the offer (most "best offer" situations allow for messages) go a long way to establishing a relationship.
8. Sometimes, it is in one's interest to contact the seller, and make a sincere offer on a coin listed without a "best offer" situation. Often, a coin may be sitting around, and a seller would be happy to entertain an educated, intelligent, fair offer. I've done this very often with positive results.

Okay, please feel free to post your tips and strategies for managing making offers on coins. Negotiating is a two-way process; one wants it too be a "win-win" for both the buyer and the seller.

 

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Excellent writeup.

I would add that establishing relationships with dealers is also important for negotiating a good price. If I've done business with a dealer before, I will usually mention it when I negotiate.

When you see the right coin at the wrong price, make a fair offer and stick to it. Sometimes you'll find that the seller will grow tired of having the coin posted at too high an asking price and they will come around and accept your offer down the line.

 

I can't stress enough knowing the coin and if at all possible the dealer (and having the dealer know you! - repeat customers get better prices - potential FUTURE customers get the best prices).

 

Excellent points from all!

A ridiculous lowball offer, in my view, suggests to the seller that he is dealing with an amateur who is not serious or an idiot he'd prefer not to have any dealings with.

Do your research and always negotiate in good faith and, a large majority of the time, you will get a deal that pleases both sides -- and leaves the door open for future deals.

 

I 100% agree with needing to know what is a reasonable offer. To do that, as a buyer/bidder, you need to have knowledge. Also, your first contact with the seller needs to be courteous if you hope to go anywhere.

 

I agree with this - I have several dealers I use regularly. I do business with them in the following way - if I believe the asking price is fair, I pay it without a best offer. If it seems a bit high, or if it's "my turn" for a deal, I make a reasonable offer. I almost never ask for more than 10% off. If someone has a coin priced more than 10% above what I feel is appropriate, I just move on...

 

Good points.

The only thing I would add seems like obvious advice, but seems to be more important on the internet: Be polite. Don't be confrontational. If the seller declines your offer, or the negotiations don't work out, don't get mad, and don't say stupid things.