Is "downgrading" by a potential buyer a common problem?

One more reason to find a good dealer and develop a relationship. Good dealers grade fairly and offer you the percent they need instead of messing around with the grade.

 

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I love this song and Tommy Edwards was a favorite singer during my teen years.

The reference here is a good metaphor.

 

It sounds like a good idea. I've never attended an auction, since I've always believed they were for high end stuff. However, I do participate in the ebay auctions. Nothing beats getting a real good deal on there.

 

My local shop is the best place I know of. However, I think the fact that all these shops are businesses will override their ethics from time to time. For instance, this shop I go to once sold me a barber half for 30. The grade was pretty accurate. I brought it back some months later and he offered me little over bullion, saying that there was a few marks that killed the grade. He's probably just being cautious, but as you can see it's unfair from the buyers perspective. I didn't even raise the issue though. There's a lot of good things about this shop, yet I don't think their reputation can reasonably be stellar at all times

 

I wish this were as easy as saying it. The other salient point here is right in the ANA's wheelhouse, or should be - education. They do Collecting 101 at every show at the "stage". How about a half hour primer on why and how the diferences between buy and sell prices are set by dealers? WE all know, but what about the noobs who just inherited grandpa's collection? They're clueless. Brick and mortar overhead costs are getting higher every year. Do they understand that the markup needed varies by how long the dealer will need to hang onto a piece? I'm not so sure. I mean, if the guy you're showing Grandpa's set to has clients "in the back pocket" that already want these pieces, he's going to give a higher offer than a similar dealer without ready buyers would likely offer. If a piece can be turned in an hour, a better offer will result than if a dealer will have to inventory a piece for months.

No one ever teaches noob collectors how to sell their inherited coins, until Beth Deisher's book. The subject needs to be in the open, not hidden or taboo. Explain where the markup goes and people will better understand.

 

Local coin and coin/estate auctions near me have lots that run from $1 to $10,000 and every point in between. My average lot won price keeps increasing (such is the nature of advancing in the field), but a haven't yet crossed the $100 average yet (real real soon now), but I always buy at least one $100+ piece lately. I take with me only what I can afford to spend and after I hit close to it, I go home, regardless of what is left. There's ALWAYS another chance to get similar pieces right around the corner.

Best all time "almost struck gold" story. There was one auction with a "box of junk medals" lot. Only me and ONE OTHER GUY bothered to notice one nice piece in there. After the lot went to $30, everyone dropped but me and the other guy. He eventually bid beyond my bankroll at $350. What was in the box of junk medals? A BU 1900 Lafayette Dollar. If one of us hadn't been there, the other one would have gotten it for $32.50.

 

I've seen that book and think it's very well done and interesting. It is no doubt helpful. However, I question whether someone with a decent or smaller inheritance of coins would even bother reading or at least skimming the book. When I talk to non-collectors, they could care less about the intricacies of the hobby, buying and selling, grading, etc. For a beginning hobbiest it would be a good read though. There was a family friend who finally managed to bring over her inherited coins to me one day. I never saw such a hoard of silver; there was over 5k in US silver coins, mostly all junk silver stuff. Once I told her the worth, she was more attentive to the details. I guess the problem is getting people past that first hurdle, namely that coin collecting is terribly boring. Once some knowledge about the hobby is passed to another person, maybe it sometimes sparks interest and maybe not

 

ownership is worth at least one grade [upgrade].


Buying it is worth at least one grade downgrade

 

What when your selling and the dealer tries to lowball you you HAVE to sell for that? The collector has the same leverage as the dealer. If the price isn't to his liking (buying or selling) he can walk away. In some respects the collector actually has the upper hand. The dealer HAS to make purchases and sales to make a living, the collector doesn't.

 

I had developed a good relationship with a dealer once. Then I needed some coins to fill an album coin order and he validated that relationsh8io.

He was the Dealer and I was..............the "Customer".

In simpler terms...................not a single break. I looked for a new relationship.

Not all dealers are bad. Kinda like owning a race car. Some do it just because they love it.

 

This problem goes even beyond what you describe as a 'noob'. There are still collectors in local clubs that have no idea why they get 'low-balled' when selling to a dealer. Never understanding why and how they need to make a profit in order to keep offering coins to the collectors who want them.

I think being a good dealer means you help bridge that gap between collector and dealer and spread awareness of this hobby.

After having been around for a little while now, my whole entire outlook on the hobby has changed. I used to think I could do everything I wanted from behind a keyboard, and then I started buying from some of those dealers from behind the screen and several of the good ones almost reached through the internet and captivated my attention. I gained some of that hidden value that Mike spoke of and it literally changed the game for me.

I also came to realize when I sold coins that I need to be making better purchases and I can clearly remember Doug advising us all here that its just important to make sales as it is to make purchases. You learn so much and then have an understanding of where you need to adjust your habits. Along those same lines I realized that I also will sometimes have to take a loss in order to move a piece or upgrade, but sometimes thats the price of being involved in this hobby.

 

I'd be willing to partner with anyone who wishes to pitch this as an ongoing educational half hour program at ANA shows, especially on weekend freebie days. I have no table duties, so I can present it, but the outline above is a good start.

I highly doubt that the average guy showing up at Rosemont or Portland or Dallas or Anaheim on freebie Saturday has half a clue how far "in the hole" a dealer starts at a show like that. Somebody's spreadsheet of plane fare, hotel, rental car, table rent, food, etc., would open a few eyes, I think.

Then take that dollar amount, divide it by show hours, and show how much retail markup a dealer must make PER HOUR just to break even. Then take that dollars per hour and run it against 10, 20, 30, 40, and 50 percent gross margins and show them why they are offered what they get offered.

Then they will understand why selling direct to a collector, perhaps through a club, while it is more work, might make more sense to them.

 

So, what percent of the dealers at a big show do you think break even or profit?
I've thought about doing a show, but figured, at least initially, it would be a net cost for the fun of doing it.

 

That depends entirely on how they account the expenses. There are shows they go to "to buy", and those they go to "to sell", I'm sure. If they are able to buy pieces at a show they know they have "outside the show" ready customers for, I think they tolerate a little more negative cash flow. But if they're "lightening up my inventory", then a positive show cash flow would seem to be more important to them. I swear I can smell the difference. Also, for the really big time quality guys, being at the show auction is the true main deal. And for the big volume guys, it's all volume and TPG label games.

 

Makes since, different priorities. Since there's no way to get accurate data for how profitable a show is, I like to use the smile test. The last few shows I've been to, very few dealers smiling, so very few profiting or meeting their goals, I figure.

 

The smile test is good, but there's another one that works before the last day. I look for the dealers keeping the "anal retentive" records of the business they do. They will want to be cash flow positive. Also, finding pieces you want, for whatever reason, from a dealer's "junk box", will win you a friend. Sometimes it's all about having less to pack and carry.

I one time bought two coins at a dealer's table - one for $175, and one from his $1 junk box, which he gave me anyway. I needed it to illustrate an obscure point for a competitive exhibit.

 

When grading coins, I never over grade by a full grade, but I will err on the high side for coins that are "tweeners" (between grades) and it seems like most are "tweeners". I do this because no matter what I grade a coin, most buyers will question the grade. I can under grade a coin by a full grade (and I have) and someone will still try to argue for a lower grade. That's the game.

 

I was once selling a 1929-S Lincoln in a MS-65RD NCG slab. Thought I'd try some new place for fun. The owner started nit-picking the coin with some BS and told me because of the "flaws" he would offer me $100. I laughed and told him WHOLESALE was $450 (Graysheet). It seemed to me he thought I was just some dummy off the street.

Left there and went to my normal (and honest) local dealer and he offered me $380.

 

It may be counter-intuitive, and the main thing many collectors might take away from the class is that shows are not an optimum place to buy coins.

To me, I chalk it up to the hobby aspect of the deal, The first time I walked into a major show I was blown away, it was the csns show, and the ana show a few months later was even more mindblowing.

I have seen and handled coins at those shows that I just do not see locally at all. Plus I am becoming a fan of the collectors exhibits, and just talking with some of those fellows is an education in and of itself.

I have noticed that the ana show is the one where the premiums seem to be the highest, take care of that will you?