A Simple Rule to Answer Tricky Hypothetical Questions
IGWT
Posts: 4,975 ✭
One party to a deal may not “rip” the other when (1) he has the advantage of specialized knowledge and knows (or should know) that the other party is relying on his expertise, or (2) there is a relationship of trust that otherwise exists between them.
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<< <i>One party to a deal may not “rip” the other when (1) he has the advantage of specialized knowledge and knows (or should know) that the other party is relying on his expertise, or (2) there is a relationship of trust that otherwise exists between them. >>
Specializing in 1854 and 1855 large FE patterns
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I'm with Bustchaser on this one.
I happen to think it wrong both ways.
<< <i>If it is OK for me to take advantage of a dealer (or other collector) then it shoud be OK for that dealer to take advantage of me (or my widow). Any previous relationship we may have had is irrelevant. Any specialized knowledge which either of us is taking advantage of is irrelevant. It is either wrong to rip the other BOTH ways, or it is right BOTH ways.
I happen to think it wrong both ways. >>
It seems to me that, if you have no specialized knowledge, any "rip" is a calculated risk, rather than taking advantage. I.e. if a coin seems like a good deal, there's still risk involved. I guess I'd just qualify IGWT's #1 to delete reliance on knowledge. Reliance or not, it's wrong.
Specializing in 1854 and 1855 large FE patterns
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<< <i>If it is OK for me to take advantage of a dealer (or other collector) then it shoud be OK for that dealer to take advantage of me (or my widow). >>
The dealer volunteered for battle, the widow did not.
Russ, NCNE
<< <i>I'm with Bustchaser on this one. >>
I think that reliance is an important part of the question. Say I find a variety in a dealer's case for which he neither bothered to look nor paid a premium. He's perfectly happy with the profit that he's making at the price that he set. I don't think that he should reap the benefit of the education that I worked for unless he had asked me my opinion in setting his price or asks me to evaluate the coin before the sale.
As a dealer, I cannot be "ripped" if while conducting business I purchase something, mark it up for sale and then someone buys it. Now of course, I may have undergraded it, not known or recognize a variety or other factors that may actually make the coin a "rip" for my buyer but as a dealer I was not "ripped". Of course the person who sold it to me did not benefit either but they also were not ripped, they just went to the wrong dealer.
On the other hand, if John Q. Public comes to me because I deal in coins and I offer him melt for his roll of MS CC dollars, that is not acceptable and is definitely a rip.
Joe.
<< <i>
I think that reliance is an important part of the question. Say I find a variety in a dealer's case for which he neither bothered to look nor paid a premium. He's perfectly happy with the profit that's he's making at the price that he set. I don't think that he should reap the benefit of the education that I worked for unless he had asked me my opinion in setting his price or asks me to evaluate the coin before the sale. >>
Ok, that proverbial widow walks in with several dozen MS CC Morgans. She wants to sell them. Just like always, the dealer rather than making an offer outright simply asks how much she wants for them. She looks at what her late husband wrote in his notes back in 1997 that they are worth 100.00 a piece. She then says that is how much she wants. She is NOT depending on the dealer's expertise in this transaction. Does the dealer still have an obligation not to cheat her? If so, IT HAS TO WORK BOTH WAYS!
<< <i>If it is OK for me to take advantage of a dealer (or other collector) then it shoud be OK for that dealer to take advantage of me (or my widow). Any previous relationship we may have had is irrelevant. Any specialized knowledge which either of us is taking advantage of is irrelevant. It is either wrong to rip the other BOTH ways, or it is right BOTH ways.
I happen to think it wrong both ways. >>
The rule that I propose applies equally to dealers, collectors, and widows and accounts for the disparity in specialized knowledge among them. On the one hand, those with expertise should not exploit the vulnerable. On the other hand, those with expertise ought to be able to engage in arms-length transactions with their peers.
<< <i>IT HAS TO WORK BOTH WAYS! >>
The dealer volunteered for battle, the widow did not.
Russ, NCNE
This is where the dealer starts to go wrong IMO. A fair offer in good faith should be made by the dealer. Now, as I wrote above, I may undergrade it (as long as I sell it for the same undergrade), I may miss a variety etc. and those may be reasons why the seller did not get maximum return.
But if I go to an "expert", I expect a fair offer otherwise why go to an expert?
As for a dealer selling, how exactly can someone get ripped by selling a coin for his purchase price plus markup? If he undergraded it, missed a variety etc. he also didn't pay for it to have those qualities, so he didn't get ripped. Unfortunately, the person who sold it to him did not benefit fully from what they sold the dealer.
Joe.
<< <i>Ok, that proverbial widow walks in with several dozen MS CC Morgans. She wants to sell them. Just like always, the dealer rather than making an offer outright simply asks how much she wants for them. She looks at what her late husband wrote in his notes back in 1997 that they are worth 100.00 a piece. She then says that is how much she wants. She is NOT depending on the dealer's expertise in this transaction. Does the dealer still have an obligation not to cheat her? If so, IT HAS TO WORK BOTH WAYS! >>
What about the example that I provided; do I really have to educate the professional dealer so that he receives the premium for which he didn't pay?
<< <i>
<< <i>IT HAS TO WORK BOTH WAYS! >>
The dealer volunteered for battle, the widow did not.
Russ, NCNE >>
Sure she did. She walked in the door armed with knowledge (however flawed) of the value of what she wanted to sell.
<< <i>
<< <i>Ok, that proverbial widow walks in with several dozen MS CC Morgans. She wants to sell them. Just like always, the dealer rather than making an offer outright simply asks how much she wants for them. She looks at what her late husband wrote in his notes back in 1997 that they are worth 100.00 a piece. She then says that is how much she wants. She is NOT depending on the dealer's expertise in this transaction. Does the dealer still have an obligation not to cheat her? If so, IT HAS TO WORK BOTH WAYS! >>
What about the example that I provided; do I really have to educate the professional dealer so that he receives the premium for which he didn't pay? >>
Then why does the dealer have to educate the widow so that she receives the premium for which her late husband never paid? Once again, it has to work both ways. It is either OK to take advantage of a buyer or it isn't.
As for an "exception" to your rule see my first post in this thread.
OKbustchaser, if I follow you correctly, everyone would have to be an expert at everything.
When you are a dealer and adverstise that you buy coins and you knowingly pay someone far less than "market" value, you have committed a "crime" IMO (and it doesn't matter what the seller paid for the coin).
When someone buys something from a dealer that I am sure more often than not includes a profit to the dealer, no "crime" was committed IMO.
Joe.
Edited to make plural and because Oreville & Joe share the same icon, confusing my simple mind.
Though we have the same icon, I swear I have never been Oreville.
Joe.
<< <i>Then why does the dealer have to educate the widow so that she receives the premium for which her late husband never paid?
OKbustchaser, if I follow you correctly, everyone would have to be an expert at everything.
When you are a dealer and adverstise that you buy coins and you knowingly pay someone far less than "market" value, you have committed a "crime" IMO (and it doesn't matter what the seller paid for the coin).
When someone buys something from a dealer that I am sure more often than not includes a profit to the dealer, no "crime" was committed IMO.
Joe. >>
It has nothing to do with whether or not one is an expert. It is simply a case of "Sauce for the goose, sauce for the gander." Either it is wrong--a "crime" to knowingly take advantage of someone or it isn't--irregardless of which side of the counter one is standing.
I think the crux of the problem is how one defines the above.
In my definition anyone that has an item for sale with a price tag (regardless with or without profit) whether it be coin dealer or garage sale and you buy it for that price, no one was taken advantage of IMO.
When I bring something to sell to an expert, I do so with the expectation of getting the best possible offer otherwise why go to an expert? The expert that has set-up shop has an ethical responsibility IMO to make an acceptable market offer for the item, not to fish for the lowest price.
Unfortunately and also fortunately, coin dealers are not regulated like other markets or dealers with the expectation of trying to prevent the ripping off of the "public".
Joe.
He quite probably did buy the coins thinking that they would increase in value over time...maybe he made a mistake in not
updating the value, or maybe she made a mistake in not doing a little research. Either way, it would be wrong for the professional
to take advantage of the unknowledgeable.
Once again, it has to work both ways. It is either OK to take advantage of a buyer or it isn't.
I think you meant seller, but I believe it is quite different when the seller is a professional dealer. For example, a dealer may
have knowledge that varieties exist within a series but, because of the work involved, may not be willing to put forth the effort
to identify rare varieties in their inventory.
I really can't imagine the following scenario actually taking place:
Customer: Wow, I've been looking for years for a nice AU coin like that - I think it's the finest one I've ever seen - How much is it?
Dealer: Well, I just bought it from a poor widow less than an hour ago. I usually only pay $100 for these, but this one was so nice
that I offered her an extra $50. I can sell it to you for $175.
Customer: You do realize that this is the rare XYZ variety, don't you? These are worth $1,000, and that's what I'll offer you for it.
Dealer: Hey, thanks for pointing that out - you can have it for $1,000. I need to call the widow right away and give her another $800 or so!
<< <i><< IT HAS TO WORK BOTH WAYS! >>
The dealer volunteered for battle, the widow did not.
Russ, NCNE >>
Sure she did. She walked in the door armed with knowledge (however flawed) of the value of what she wanted to sell. >>
That argument is specious and without merit.
Russ, NCNE
<< <i>I think you meant seller, but I believe it is quite different when the seller is a professional dealer. For example, a dealer may
have knowledge that varieties exist within a series but, because of the work involved, may not be willing to put forth the effort
to identify rare varieties in their inventory.
I really can't imagine the following scenario actually taking place:
Customer: Wow, I've been looking for years for a nice AU coin like that - I think it's the finest one I've ever seen - How much is it?
Dealer: Well, I just bought it from a poor widow less than an hour ago. I usually only pay $100 for these, but this one was so nice
that I offered her an extra $50. I can sell it to you for $175.
Customer: You do realize that this is the rare XYZ variety, don't you? These are worth $1,000, and that's what I'll offer you for it.
Dealer: Hey, thanks for pointing that out - you can have it for $1,000. I need to call the widow right away and give her another $800 or so! >>
You are right. I did mean seller.
People say, "I have spent the time doing the research on those varieties. I therefore deserve the right to rip the poor dealer who didn't take the time to do the same studying." If so, then the dealer (who has done the research on what Morgans are worth) deserves the right to rip the widow who didn't do her homework.
It is either right or wrong. It can't be both.
As for your scenario above, at least twice, I HAVE told a dealer that a particular coin was a rare variety and offered to pay what it was worth if he would pass some of it along to the original seller. Once (when he knew the seller) he took me up on it. Another time (when he didn't know) he knowingly sold me the coin based on his cost. The key word there is KNOWINGLY.
This goes back to a point I made earlier. According to you we all need to be "experts" in everything we do.
Are you trying to say that "experts" set-up shop so they can rip the public? (yes, I know some do)
When I take my car to my mechanic, I should expect an honest assessment as to what is wrong and how much it costs to repair it. When I call in a serviceperson to repair something in my house, I expect the same. I shouldn't have to know what is wrong or how to fix it (of course that would help safeguard me) but the expectation is that the "expert" should treat me fairly and ethically otherwise again, why go to an "expert"?
Or are you saying that I should take some classes in auto and home repair because the "expert" is allowed to rip me if I don't?
Joe.
<< <i>I actually have a little less sympathy for the widow in this situation
This goes back to a point I made earlier. According to you we all need to be "experts" in everything we do.
Are you trying to say that "experts" set-up shop so they can rip the public? (yes, I know some do)
When I take my car to my mechanic, I should expect an honest assessment as to what is wrong and how much it costs to repair it. When I call in a serviceperson to repair something in my house, I expect the same. I shouldn't have to know what is wrong or how to fix it (of course that would help safeguard me) but the expectation is that the "expert" should treat me fairly and ethically otherwise again, why go to an "expert"?
Or are you saying that I should take some classes in auto and home repair because the "expert" is allowed to rip me if I don't?
Joe. >>
Yes, you should be able to expect an honest assessment as to what is wrong. All I am saying is that he should be able to expect an honest assessment from you in any transaction between the two of you where you have more knowledge than him, also. It is a two-way street irregardless of who comes to whom.
<< <i>Jim -- Let's say I spot an unattributed 1883 5c OVD up for auction by Heritage. I don't see any difference between a private sale and an auction in application of the principle that you advocate; but, if you do, imagine instead that the coin is in Heritage's case. Would you have me call Heritage to advise them that they (and their consignor and the grading service) missed the variety? If I can't cherrypick, I can't afford to buy it.
I think that it is a little different in a public auction. There is no set price being asked. In most cases the "true" market price (or at least close) will be realized as the chances are good that you will not be the only person to spot it. Assuming that the coin is in Heritage's case, then, yes, I DO feel that you have just as much obligation to let Heritage know as Heritage has when buying common coins from someone with less knowledge than the Heritage buyer...ie, either you should inform them or you should not blame them if they "make a good buy".
Edited to add...Let me make it clear here that I DO NOT think that Heritage is the type of dealership who rips off little old ladies. Does the company have sharp buyers? Yes. Do I think they are fair? Eminently so.
Well, it is a very close call, and I can understand why some feel that way, but I would never do that myself.