I recently purchased a semi-key date collectable Morgan Dollar for $250, a fair value for the seller. I should be able to sell relatively quickly to a Morgan coin collector looking for a hard-to-find rare date coin.
Here’s the important part: Another coin dealer had offered to pay just $20 (80% of the value of silver content) for the very same coin!
What do you think? Was this an example of buyer beware? Knowledge is power, and lack of knowledge leaves a seller vulnerable. The approach used by the other coin dealer is not unusual: many simply buy coins for the lowest possible price… period. Their philosophy is that if a seller doesn’t understand the value of the collection, too bad. Unfortunately, dealers can stay in business for long periods of time with this approach because many sellers inherit family collections, and have little or no numismatic knowledge.
Years ago, I began using my numismatic knowledge to help friends and family avoid low-ball dealers, and sell their collections for fair market value. Word got around, referrals grew, and I am now a full-time Grand Rapids coin dealer who continues to provide fair value for all clients.
In my opinion, buy/sell transactions with coin dealers should be fair for both parties.
Here’s how it should work:
A coin dealer buys a rare collectible coin for a wholesale price, approximately 80%-85% of the “retail value” of the coin. For really high-value coins, some dealers pay up to 95% of retail. This allows just enough room for the dealer to resell it to another collector for 95%-100% of retail value, making a small margin, and hopefully generating a profit. The coin dealer also assumes a risk–that there are willing buyers are able to purchase the coin at the estimated value.
The expected outcome of such a transaction is that the seller receives fair value, the dealer makes a small profit, and the collector acquires a hard-to-find rare coin for his or her collection at a fair price.
If you lack numismatic knowledge, you must find a reputable coin dealer:
Do some online research about your coin(s). Ask around for recommendations.
Don’t be afraid to ask questions.
Find out if they belong to the American Numismatics Assn, PCGS, and NGC.
Learn if there are any complaints filed with the Better Business Bureau.
Ask about the dealer’s buying philosophy.
Ask how they sell their inventory. Ask for references. You should feel like the coin dealer is working on your behalf and not just trying to buy your coins.
Be aware that “We Buy Gold” shops, pawn shops, traveling road shows, and jewelry stores generally have little expertise in rare coins, and often pay a fraction of what a reputable coin dealer will pay.