Why buy from the dealer when I can get it from the auction myself?

DesertLizard

OK, FUN is not over 48 hrs and I am already SPAMMED by 3 dealers telling me what they have for sale. Oh gee wow, I see a coin I was outbid on by a ridiculous 40% and the dealer wants to sell it to me for another 58% over that!

Why on earth would any knowledgeable person buy from a dealer the same coins they could have purchased at the same auction for about 30% LESS? I know some are going to come up with some reasons but are they the same ones who complain they can't sell their coins to dealers for more than 50% of what they paid? Gee, I wonder why?

It reminds me of the consultant joke: What is a consultant? A person who says "Give me your watch and I will tell you what time it is"!

Apply that to some of these 2 bit dealers. Dealer A from Texas, "....hi Desertlizard, just writing to tell you about the newps of Kaufmann Seated proofs we got in, all PQ++ for the grade...yada yada yada...these coins are grossly undervalued and undergraded...let us know ASAP as we have other buyers waiting...." Signed Dealer A_hole from Texas. I bought once from these losers almost 4 years ago and they have yet to figure out I don't need them nor want them any longer. They act like they are the only ones with coins in the world. So now some other poor sucker will get stiffed with some Seated material about 30-50% over market.

Then there is Dealer B from Wisconsin who called me tonight from the Orlando airport and told me he rather sell to me at a lower price then sell at auction where he always gets a higher price. Huh?!! This is a full time dealer who is a PNG member and boosts an inventory of $2 million. Can he be that stupid to think I am that stupid? Yes....he IS that stupid. If he reads this he will recognize himself right away unless he's truly brain dead. {special to the dealer from WI, don't call me anymore}

Sometimes I feel the coin market runs on the greater fool theory. Dealers buy on a hunch and then try to hype what they bought. It doesn't sell fast enough, then try ebay then back to the national auction houses. If you are patient enough the coin eventually gets back to a reasonable price and is available. I laugh when I hear a coin is in strong hands / collection, locked away for decades. Yeah, a few are but far fewer than we realize.

In this post auction season resist aggressive attempts to sell you over priced coins! You will be glad you did come the Spring.

Coppernicus

"Sometimes I feel the coin market runs on the greater fool theory. "

Hey DL - As a stock investor for over 30 years, and options trader for 5 years (but years ago), and a coin collector for almost 40 years, can you show me a market that doesn't run (at least sometimes) on the greater fool theory?

Every market I know of gets out of whack once in a while. The latest in my area of interest/expertise? Check out the hammer price on Lincolns at FUN.....'nuff said.

Coppernicus

dragon

DesertLizard,

Your statements are not entirely accurate of most reputable dealers, and are also half truths to an extent.

1) Most reputable dealers do not work off of 58% margins on coins they recently aquired at auction. In a case where they might, it could be because they were lucky and got an excellent price on the coin in which case a large markup would not necessarily mean it was overpriced to a client at a large markup.

2) Dealers in many cases offer a valuable service to their clients by attending auctions and examining the coins in person for which a client may be interested in. Many times, a person would pay either much more or less for a certain coin in auction after viewing it in person.

3) Dealers incur substantial expenses by traveling to major auctions and shows and many times spend hours viewing auction lots for specific clients,,,,,,,this is a service that they are expected to and should be paid for.

4) Many times a lot can trade between dealers several times immediatly after an auction, so the dealer offering the coin to you may not necessarily be the one who purchased it at the auction itself, and his markup may be far less than the amount actually paid for that coin in that sale.

5) " Oh gee wow, I see a coin I was outbid on by a ridiculous 40% and the dealer wants to sell it to me for another 58% over that!"

How do you know that your bid wasn't "rediculously" low?? If a knowledgeable dealer was willing to pay 40% more than you after seeing the coin in person, maybe it was still a bargain at that price and a further large markup is not unwarranted based on the coins qualities.

6) I don't know of any good dealers that would buy "on a hunch" or ever call me from an airport or tell me how grossly undervalued and undergraded something was unless it was a cold call from a shady vest pocket type of dealer or marketing firm.


"If you are patient enough the coin eventually gets back to a reasonable price and is available"

Maybe, maybe not, if it was truly an exceptional or desirable coin, chances are it will be put away by another serious collector who went that extra mile to aquire it and you won't see it again.

dragon

Tonekiller

DL,

I have noticed from several posts you seem to be dealer hunting or just plain mad at "dealers" in general. Not to sure what has happened in the past but please don't lump all coin dealers into the same bag. All professions have a few bad apples, but most or good.

IMO, I have meet few collectors that did not have their game down and their personal knowledge. That includes coins and market value. One last thought, when buying or selling I have also yet to meet a collector or dealer that does not want to get top dollar for a coin.

I would agree with both Dragon and Legend.

TBT

barberlover

I beleave an experienced collector uses all resources at his disposal to find the coins they want. I have noticed dealers who fairly price there coins and ones that don't, I've seen some beatiful coins sell at reasonable prices at auctions, and at the same auction seen ridicoulus prices on over graded common coins. My favorite source is 2 medium sized shows in the spring and the fall in my area where i can see the coins in person. If i choose to buy a coin from a dealer it's because i love the coin and agree it's priced fairly, i will even attempt to get a price reduction if we're somewhat far apart on price. There are multiple sources of coins available at reasonable prices and some very good dealers out there, as well as the bad ones. I have never baught a coin from a dealer that i first saw in an auction at a higher price than my max bid was or my max bid would have been higher. But if you truely want a coin that a dealer owns and you think it's a nice coin for the grade in a series you collect, would you rather buy the coin with the dealers 20 percent mark up or say oh well, i didn't get rock bottom wholesale so i'll pass even though i love the coin ?

Singapore

DL - Your basic question is a good one.

My sense is that a lot of the dealers hope that collectors don't know about the auctions, don't pay attention to them or don't care -

Obviously if a coin that I know I want (e.g. I've seen the coin before) is going to be appearing in an auction I'll bid on it myself.

The circumstances where I would not bid on something myself might be as follows:

1) I didn't know about it (pretty obvious, but it happens often).
2) I'm not positive I want it (means I haven't seen it in person, need an expert opinion, etc. I attend some auctions a year, but I can't be flying all over the place all the time and I can't see every coin in person).
3) There are lots of pieces being offered at the same time and I can't afford to bid my maximum on all of them (this happens often as well - usually I'll wait to see what shakes out, what I got, what I didn't and how much money I have left to pursue some things from dealers).
4) Its something expensive and I can get terms from my dealer that I can't get from the auction house.

I find that if I attend an auction as a collector I seem (SEEM) to acquire things for pretty good prices as many of the dealers don't bid aggressively against a collector. Or I could be dreaming. Seems that way though.

ANACONDA

Some dealers and some employees of some dealers, it's true, are not rocket scientists.
First of all, have you told the dealers off or made them counter offers which show them that you are in the know? Even the dumb ones won't waste their time if they come to know you as someone to leave alone. Make it easy for them.

Now, "Why buy from the dealer when I can get it from the auction myself?"

Great question.

Two answers. Can you look at the coins yourself? If yes, then you probably would want to buy them yourself. It can get complicated here but, I'll just leave it at that.

Or will you be relying on the description of the auction company and won't be able to view the coins?

I wouldn't do that. The auction companies can't even in good conscience, recommend you do that. It's in the terms.

If you buy three things at auction for less than 10K total, and didn't view the lots yourself, one of them will suck. Maybe even more than one will suck. Your 10k becomes 9K or less. Just like that. Your wife will sense your angst and suggest specializing in buying sight seen.....jewelry....for her.

You will have barely beat out another person who didn't see the coin and who also relied on the description of the auction company.

Both of you will not have known that there was a mark on the portrait that didn't seem to matter to the fellow writing the description (who had 250 more coins that day to write descriptions about) but which will make your stomach turn every time you look at the coin.

If you don't care what your coins look like, and you can't view the coins, fine, buy them at auction yourself if you can't view the lots. I'm confident, though, remembering other intelligent posts of yours, that you do care about what your coins look like.

When you buy it at auction, generally speaking, it's yours. When you buy it from a dealer, generally speaking, if you don't like it, you can return it.

Now, if you're buying fifty thousand dollar coins, chances are you don't mind either going to the auction or paying a trusted friend with an eye like yours, to eye ball the coin. Hopefully, he won't forget to look at the coin and hopefully, if he does forget, he'll be honest with you about it.

Also, if you've got a reputation for buying big coins at the auction houses (or even just a reputation for being a stand up guy) most houses will send you the coins before the auction so you can look at them in person.

adrian

BASEagle

Some advice:

(1) learn how to use the junk filter on your email program - it will automatically delete email from people you don't want to communicate with.

(2) caller ID on your phone. Then, don't answer if it is someone you don't want to talk to.

Technology is your friend. Seriously.

Mike

leothelyon

It's just like a car auction and the higher percent are car dealers. A dealer can have so much inventory.
They don't buy too much overhead unless they can blow it out the door. Dealers have expensives, taxes
and they know how much profit they have to work with. A buyer can participate in the auctions but be prepared to pay more then what the dealer is willing to pay if you win the auction. A dealer will try to
get a item for less then they can sell it to make a profit. A successful dealer will know what's moving and what's not and some of this knowledge is gathered from sales from the previous year of sales. If I were to venture into some investments and someone offers me 1000 GE clock radios, before I buy, I better have some idea if I can get rid of them and make a profit. I'm not a dealer and some good advice has already been posted. Just by looking at the increments of the bids, 25, 50, 100, 250 etc. gives an idea
where the value of an item may jump if it's 50% lower or higher then the percentages of the bid increments, this in turn, will tell you if you paid 5% to %15 below or above and if another bid would be
in that margin to satisfy the buyer or seller for whatever roll your playing that day.......does that make sense.........bhawawawhhh........I really don't know what I'm talking about .......later....

Leo

shirohniichan

If I were buying expensive coins, I'd certainly want a dealer with a good eye bidding for me. I bet everything I won at FUN was low for the grade because only my low-ball bids on group lots won (the stuff I bid above retail sold for more than my max bids). We'll see when the package arrives!

DesertLizard

Some good points made.

Some edification, I was speaking of a knowledgeable person being approached unsolicited by someone who had no working relationship established. That's basic stuff. Most dealers, not all, are clueless. Fortunately, a very small minority are also dishonest or outright theives. I have been taken 2x for less than $1k, in the past 30+ years but not in over 20 years. My early experiences are what I call tuition. I try to help other collectors avoid my mistakes.

As I have said in the past I do not wish to deny dealers from making a living. I regularly use 2-3 dealers to purchase coins I do not see nor have acccess to. They are straight forward and bend over backwards to please, I have even purchased out of guilt a few times. The ones that frost me are the "I have expenses and bills to pay" crowd who are hawking marginally unique coins at a 50% markup. OK, so they paid $15,000 and now they are asking me to pay $23,000?! I don't think so. If they can't make a living with a 15-20% markup then they need to find new work.

A while back someone wrote, to see the true value of your coins walk the auction floor trying to sell to dealers. I have never done that as I have usually sold to other collectors but I think it would be a good exercise for every collector. I am willing to bet there would be alot more careful buying / bidding after such an experience.

Bottom line I hate to see collectors get hurt buying high and deluding themselves into thinking they are investing. Coins are a frivolous hobby, like buying a Mercedes S600. But at least with the car you know it's not an "investment". In the past week I have seen 3 board members trying to sell their coins because of emergencies, I wonder if they bought smart?

Thanks for all of your comments.

Zerbe

I think DL is sick of the Rip-off, lying, greedy, people, operating as coin dealers. All of you honest, reputable, dealers, know who I am referering to. They give a bad name to dealers in general and they don't care, as long as they are allowed to change their company name, or change the name of the ACTUAL owner of a coin co., and rip-off even more innocent people. As I said the scumbags are known, especially by most dealers, and they ruin the enjoyment of the hobby for myself, DL, and many others. On one hand you have Legend and Pinnacle, where you are lulled into believing coin dealers are so nice and honest, then out of nowhere comes BS coins and he rapes and pillages you of your money and your trust in dealers in general. If the dealers, ANA, PNG, PCGS, or NGC cannot, or will not confront and chastise the outright lying, a-holes, then they will always be here and all coin collectors, instead of spending time building their sets, will have to be on their guard 24 hours a day, worrying about every purchase they make. There really is a serious problem with dishonest, greedy dealers, even though they are in the minority, they are doing major damage. They can advertise on the front page of Coinworld, and claim to be the biggest, most reputable dealer in the world, but underneath they are just greedy thieves, always looking out for themselves and screwing anybody and everybody, even other dealers. Lately when a dealer offers me a coin, I ask them if they got the coin from BS coins, because if they did, I do not want it. I will not promote a known coin doctor, scumbag dealer. I am hoping all the BS coin dealers will go out of business, but unfortunately, they seem to be doing a lot of business. You only have to be involved in one coin deal with these people to make you view the coin hobby in a completely different light. It makes you feel like your walking through a mine field. All Registry participants and newbies be very careful, because these scum are the ones that come after you by spamming and offering multimillion dollar inventories. In conclusion, the 2 or 3% of all coin dealers in the USA are, outright dishonest, they will lie profusely, try any and every way to sell you a coin at 60% over it's true value, will doctor coins, and display all the traits of a high power telemarketer. Anybody who says this small percentage of low life dealers does not exist, please respond to this thread, and in responding, please offer your thoughts on what if anything can be done to protect the innocent coin collectors and innocent coin dealers. Obviosly, they will not go away on their own, so what can be done ???? By the way I still buy coins, but only from dealers I know well, with a long standing track record. Everybody knows who they are, or do they?? If BS coins is doing a brisk business, then I guess everybody does'nt know who the "good' dealers are. Zerbe

prooflike

It is all about matching buyer & seller. If a seller can sit on inventory waiting for that 58% margin, then it is his/her decision to do so.

Obviously with your title: Why buy from the dealer when I can get it from the auction myself?

...seems it didn't work out either way... you didn't get it at auction nor were you willing to pay the piper's price.

ARCO

you made some good points desertlizard. The internet is helping collectors to research and buy coins for themselves that otherwise were mostly the domain of the dealers. Without it I would not collect coins.

Coin collecting is absolutely gratifying to me, but is a hobby. It is my discretionary income, and I spend it on coins that I will enjoy and that I feel are close to what I could re-sell the coin for. If others get ripped, deceived, conned or are parted with their hard earned money it is their own laziness and sloth. It has nothing to do with coin collecting, but everything to do with human nature and the business world.

It is hard for me to get riled up, as I don't care if a certain series is overvalued, undervalued etc...I simply collect something else. Coin collecting rewards patience, follow your own set of buying rules and the coins will find you!

My karmic message

Tyler

MacCoin

hi DL
I don't know if I should post, my most valuable coin is only an AG/G 77 ICH I paid 350 for. old Legend would get read hunrgy selling coins to me. sometimes I feel the same as you. but you have to rememeber you ain't dealing with collectors here. these people you're talking about make a living getten as much money as they can from any coin they can get it for. they focused on you because you're a coin collector. hey; it ain't a job I'ld want!