Test Yourself by Selling a Coin|
December 17, 2013
Last week’s column (Protect Yourself, which you can read here) discussed some measures by which collectors could protect themselves against deceptive advertising. At the end I invited readers to submit other ideas to share. I received multiple high quality responses from both dealers and collectors.
One sage reminder was to never buy or sell something where you do not know the value. Here are some ways you can get an idea of the current market for items being offered to you, or that you are considering selling.
• Check up-to-date catalogs
• Check numismatic auctions for recent prices realized
• Check online auctions, especially focusing on completed sales rather than simply relying on “buy it now” prices that may not be realistic
• Search for your coins or paper money and see how dealers are pricing the same or comparable coins
Another great point is to get a second opinion, from either a dealer or an experienced collector, as to the quality and value of an item you have purchased. It is better to hear bad news early on instead of years later. I continuously hear horror stories of someone who was “buried” in numismatic material at prices far above those charged by most dealers. All too often these instances come to light when the buyer dies and the heirs need an appraisal to liquidate the items.
Further remember that just because a coin or piece of paper money is graded by a widely respected grading service does not automatically mean that the item is worth owning or that the price the seller is asking is reasonable. It is also possible that the piece may be one of those that “just made it” for the grade on the holder rather than being a solid quality specimen.
One contributor reminded that numismatic markets go through fads and that one of them today may well be modern coins certified by third-party grading services in the ultimate grades of MS- or Proof-69 or -70. In many instances, the potential population for such coins could be many times higher than it is if only enough pieces were sent to the grading services.
Beyond that, I have personally seen a number of MS/PR-70 graded coins that have developed problems after they were encapsulated. In all too many instances, collectors who try to sell my company such coins end up being paid primarily on the basis of bullion value rather than on any numismatic value. Such issues can be fun to collect, but watch out if you purchase them because you think of their investment potential.
What may be the most useful suggestion I received is that collectors should periodically try to sell one or more of their pieces. The acid test of how desirable your coins and paper money might be is by what someone other than you would be willing to pay for it. The dealer who sent me this email recommends that his customers do just this. His general recommendation is to try selling a single collector item at a coin show, the larger the better. After first checking price references and considering what the spread might be on the coin (you are unlikely to be paid $4.50 for a coin that retails for $5, but you might possibly be paid $85-$90 for a coin that would sell for $100), the seller tries asking a relatively solid price for the piece. If a dealer will pay that much, then the coin is sold. If a dealer passes but does show some interest, the collector might ask if the dealer would like to make an offer. If the dealer does so, the collector can accept, decline, or try to negotiate further.
The point of trying to sell an occasional piece is that dealers are likely to detect all the reasons why your piece may not be worth what you thought (overgraded, cleaned, damaged, planchet problems, corrosion, etc.). If you find it easy to sell your coins at prices you judge fair, that indicates that you are probably a careful buyer. If you consistently find that you cannot liquidate your items anywhere near to what you had thought was a fair price, you may need to refine your purchasing practices.
By choosing to sell an item periodically, you get the benefit of learning the real market, not what you may think it is. In gaining this information, the one who benefits the most is the collector.
(Here is a side story: When I have hired students as employees, I normally ask them how do you know what something is worth. Just about all of them refer to what is quoted on the menu, or prices marked on the item, or catalogs or price guides. Only once did I hear the correct answer – an item is worth what someone is willing to pay for it.)
Patrick A. Heller was the American Numismatic Association 2012 Harry Forman Numismatic Dealer of the Year Award winner. He owns Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects.
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