How do dealers buy and sell?
stevepk
Posts: 238 ✭✭✭
I would like to know how dealers are able to buy quality coins for prices low enough to be able to sell for a nice profit.
I have assembled a United States type set from the half cent to double eagle and have carefully chosen each coin so that I have a presentable type set. The set focuses on problem-free 19th century coinage, most of which are PCGS or NGC certified. I have also begun a set of Indian cents and large cents from 1816 to 1857. I've noticed some coins are very difficult to obtain at Greysheet values, for example, the 1857 large cent. It appears early problem-free 19th century coins in PCGS or NGC holders can also be difficult to obtain at Greysheet prices.
I have had discussions with coin dealers who claim to never pay above Greysheet for ANY coin. For example, I gathered dealers' selling price on a late 18th century coin for my type set. I will share no details in regards to what the coin was, but the Greysheet value was one thousand dollars and is a coin that is in high demand.
Dealer A has the coin for $1200, but it is ugly
Dealer B has the coin for $1300
Dealer C has the coin for $1400
Although the coin was valued at $1000 in Greysheet, I purhased coin B at $1300 and am happy with it. This is the same coin that a dealer told me he would have to pay less than Greysheet so that he could sell it for a profit. How would a dealer go about locating a nice type coin for less than Greysheet for a nice profit when he 'flips' the coin?
Where do dealers find quality, eye appealing coins for less than Greysheet? Are dealers able to buy nice coins for low prices and a handsome profit on resell, or do most dealers try to sell a high volume of coins at low markups for a handsome profit? Are most coin dealers wealthy? How much is the typical markup on a $200 coin? How much is the typical dealer markup for a $500 coin? How about a $1,000 coin?
Back to my 1857 cent, I did plenty of research and concluded that Greysheet has NO correlation to the actual value of a problem-free, attractive 1857 large cents. A dealer told me that if he were to buy the coin, he would pay 75% of Greysheet as that is his general rule for buying ANY coin. That leads to another question. How do dealers who are a slave to Greysheet stay in business? Most people who can afford nice coins aren't the type of people who become so desperate that they are willing to accept pennies on the dollar for immediate cash and are usually concerned with their ROI (return on investment).
As a collector, should I expect to never recover the money I've spent assembling my collection if and when I decide to sell? I know there are dozens of factors to consider into the equation and that this is a hoby rather than an investment, but assume I haven't been buying fake coins are a bunch of garbage coins that no one else collects or has any demand for. Once I've sunk thousands of dollars into somthing it's comforting to know I have a marketable asset.
I know every collection has its 'hits and misses' with some coins being great buys while others were over paid for, but at how do dealers buy and sell and at what markups do they usually buy and sell?
I have assembled a United States type set from the half cent to double eagle and have carefully chosen each coin so that I have a presentable type set. The set focuses on problem-free 19th century coinage, most of which are PCGS or NGC certified. I have also begun a set of Indian cents and large cents from 1816 to 1857. I've noticed some coins are very difficult to obtain at Greysheet values, for example, the 1857 large cent. It appears early problem-free 19th century coins in PCGS or NGC holders can also be difficult to obtain at Greysheet prices.
I have had discussions with coin dealers who claim to never pay above Greysheet for ANY coin. For example, I gathered dealers' selling price on a late 18th century coin for my type set. I will share no details in regards to what the coin was, but the Greysheet value was one thousand dollars and is a coin that is in high demand.
Dealer A has the coin for $1200, but it is ugly
Dealer B has the coin for $1300
Dealer C has the coin for $1400
Although the coin was valued at $1000 in Greysheet, I purhased coin B at $1300 and am happy with it. This is the same coin that a dealer told me he would have to pay less than Greysheet so that he could sell it for a profit. How would a dealer go about locating a nice type coin for less than Greysheet for a nice profit when he 'flips' the coin?
Where do dealers find quality, eye appealing coins for less than Greysheet? Are dealers able to buy nice coins for low prices and a handsome profit on resell, or do most dealers try to sell a high volume of coins at low markups for a handsome profit? Are most coin dealers wealthy? How much is the typical markup on a $200 coin? How much is the typical dealer markup for a $500 coin? How about a $1,000 coin?
Back to my 1857 cent, I did plenty of research and concluded that Greysheet has NO correlation to the actual value of a problem-free, attractive 1857 large cents. A dealer told me that if he were to buy the coin, he would pay 75% of Greysheet as that is his general rule for buying ANY coin. That leads to another question. How do dealers who are a slave to Greysheet stay in business? Most people who can afford nice coins aren't the type of people who become so desperate that they are willing to accept pennies on the dollar for immediate cash and are usually concerned with their ROI (return on investment).
As a collector, should I expect to never recover the money I've spent assembling my collection if and when I decide to sell? I know there are dozens of factors to consider into the equation and that this is a hoby rather than an investment, but assume I haven't been buying fake coins are a bunch of garbage coins that no one else collects or has any demand for. Once I've sunk thousands of dollars into somthing it's comforting to know I have a marketable asset.
I know every collection has its 'hits and misses' with some coins being great buys while others were over paid for, but at how do dealers buy and sell and at what markups do they usually buy and sell?
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Comments
Collector since 1976. On the CU forums here since 2001.
I have built a satisfactory collection, and the word, "Greysheet", rarely pops into my head, rarely leaves my lips, and rarely is heard by my ears.
The word, "Greysheet", was used eleven times in the OP.
time and have NEVER seen a greysheet or bluesheet in my life. Obviously I do not frequent
B & M's even though there is one less than a 100 yards from my home. I could walk there
if I choose.
I don't usually have to worry about the pressure of buying the coin now, as I am not in the
retail type business. So, I have some time to research what I'm buying by looking at it today
and buying it tomorrow (if that makes sense).
Hope that helps some as not all dealers or collectors do it the same way!
bob
Try getting to know some of the dealers here on this forum who move the kind of coins your into, if the quality is there you'll get fair offers from them.
As far as the greysheet goes...what RYK said.
``https://ebay.us/m/KxolR5
<< <i>How do dealers buy and sell and at what markups do they usually buy and sell? >>
It's work. Really, it is. Through experience, a dealer will know where great coins can be obtained at reasonable prices, that will allow a reasonable profit when these coins are sold. Notice I said "obtained at reasonable prices" and I didn't say "obtained at 75% of Greysheet". As most serious collectors know, the Greysheet has values of some coins that are too high, and some that are too low. Knowing which coins are worth more than Greysheet and how much more than GS they are worth, is something many dealers know within their area of specialty. If you examine the inventory of a dealer who never pays over 75% of Greysheet for anything, there are certain coins that dealer will never own, because their owners know that those coins are worth more, and in some cases, much more than GS. For example, an 1878-S half in EF-40 is valued at $40,000 in Greysheet, but Heritage just sold one at auction today for $86,250. It is quite unlikely that anyone owning a similar coin will sell it to the dealer paying 75% of GS ($30,000) for it. But maybe a dealer bought that coin for $65,000, consigned it to auction, and now it sold, resulting in a decent profit.
What markups do they sell at? My markup has ranged from minus 95% to 2500%. It depends on what the market thinks the coin is worth. And, before someone complains about the 2500%, first that coin was a cherrypick from a dealer and it was sold to another dealer who I told I had picked it. He said congratulations and willingly paid the price of the coin. And, second, if you found a 1955 doubled die cent in AU in your change, would you sell it for 26c? That is a 2500% markup.
An authorized PCGS dealer, and a contributor to the Red Book.
In defense of physical store dealers: most of them have to pay some rent, and they actually serve a purpose (for widows and orphans) - to help liquidate estates.
Most of them are doing better on buying and selling gold (even gold fillings!! - yes I witnessed it).
Without the physical store, wherelse could you complain about the economy, fiat currency and the legitimacy of Ron Paul?
One thing that a collector must confront is the urge to buy on the cheap. There are no Santa Clauses in the coin business. If you want real quality, you should plan on paying for it. When I have stretched to buy a coin, I have never regretted it. I also have coins that I will dump at some point because I realized, too late, that I stupidly thought I was getting a great deal. Once in a while, you will get lucky if you are overly price-conscious, but most of the time you will get hosed.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
As for getting the money out, I always fall back to these three areas: grading skill, access to coins and market knowledge. A person that is above average in all three areas is likely to do well financially. Those that are below average in all three areas are almost sure to lose money. A person asking the questions in this thread is likely below average in access to coins. The other two, the original poster can self-evaluate. The mythical average collector buying at retail, selling at auction and paying fees, or at wholesale to dealers does well to break even after five years.
"75% of sheet" works great for things like Proof sets. I think even most collectors can probably obtain
Proof sets at back of Bid pricing. I think commems in general, excluding monster toners and maybe the key
dates (Hawaii, etc.) are readily available around Bid, indicating the dealers are buying them back of Bid.
Morgan dollars are another example. I have no trouble locating better date, mid to upper circ grade indian cents around Bid, again telling me they are obtained south of Bid.
Now large cents are another story altogether. Nice large cents, and especially nice early large cents, are scarce.
They tend to move from specialist collector to specialist dealer (or to another specialist collector via auction or private treaty).
The market for these (and many other scarce coins) is defined by these specialists and auction records, and is far removed from
sheet prices. You have to know these markets, and by your comments, it sounds like you are doing your homework.
<< <i>for example, the 1857 large cent. It appears early problem-free 19th century coins in PCGS or NGC holders can also be difficult to obtain at Greysheet prices. >>
I have never understood where the editors of the Greysheet editors got their numbers for half cents and large cents. When I was dealer I could never buy PROPERLY GRADED coins with NICE SURFACES for those low numbers. I have always paid well above the Greysheet numbers for the early copper coins that I like, when I sold them got higher prices.
From what I can those who deal in nice quality early copper simply ignore the Greysheet numbers and buy and sell at higher figures.
experience, creativity, knowledge and a lot of sources
.
Dealers in business for a long time should know a ton of potenial sellers and buyers
NGC registry V-Nickel proof #6!!!!
working on proof shield nickels # 8 with a bullet!!!!
RIP "BEAR"
Then they sell top dollar eye appealing, hi end top quality, crackout candidates.
In honor of the memory of Cpl. Michael E. Thompson
<< <i> before someone complains about the ... >>
You're just paying the bills and helping people find what they're looking for so I'm sure everyone understands that (hopefully). I'm assuming most everyone who has a focus for more than a few years has cherried something at some point. Thanks for taking the time to reply
Suppose, for simplicity, you as a dealer have to make $100. You can either buy coins for $95 and sell them at $100 for a $5 profit and repeat 20x with frequent sales, or you can buy a coin at $25 and wait until someone buys it for $125. Either way, you're making $100. However, by buying 20 coins at $95 each and selling them for $100, the buyer is not 'sunk' in his coin and you as a dealer establish a better reputation for being fair to buyers and sellers. It takes more work, but your income may be more predictable as transactions are rolling smoothly. If your plan is to buy a coin for $25 and sell it for $125, you will still make your $100. However, during the time that coin sat in your inventory, you could have sold 20 coins at a lower margin and made the same profit.
I know dealers have to make money, but are they generating small profits on frequent sales or generating large profits on infrequent sales? A dealer should be able to make good money by buying at strong prices and selling for just a little bit more if he is able to generate enough sales. With a solid reputation, I don't see why this can't be done.
I know these are extreme ends of the spectrum and ignore several important factors, but which is the more common practice?
Those with a small inventory might turn it over faster and not tie up so much capital, but won't be a place where date and mintmark set builders have any realistic chance at completing their sets. In the first post you asked how dealers find coins for inventory. They can't order more from a warehouse or a factory, they have to find it. So even if a dealer can find a few coins for $95 to sell at $100, it isn't likely to be repeatable and scalable. Meaning the dealer can't just order 5000 $95 coins and sell them for $100 each to make $50,000. The income wouldn't be predictable because for the most part, finding numismatic inventory in bulk isn't predictable.
In particular, high end dealers know there are a finite number, a relatively small universe of high end coins and high end collectors. They may occasionally sell for a $5 profit, but only to their best friends or for special circumstances like a young kid that they like. Many collectors have observed dealers buying off an auction site, and marking up 30%, 40% even 50% on $1000 value coins. One dealer said that in his dealer to dealer transactions 10% was more the norm, but that is dealer to dealer in the inner circle. Another factor is that just because there is a high asking price it doesn't mean the dealer gets it. They might come down off that price. Some dealers ask high and then immediately cut 5% or 10% after two months of sitting. Other dealers don't do that, like I said there are lot of different ways to conduct business. Some dealers only make a one-way market in their coins. Meaning they sell for a high price and don't want to buy from collectors they sell to.
As collectors we can choose which dealers to frequent. There is no one-size fits all for collectors or dealers. Some like a high level of service. Some like a big selection. Some shop for price. Some are mostly concerned about quality. Some fall under the spell of the razzle dazzle of questionable investment reports, or the phony song and dance of a good story about an estate.
It is curious to see the word "should" in your reply. Coin dealers aren't charities. The unvarnished truth is that the very top dealers make huge money, enough to buy private estate compounds in Costa Rica, and/or keep two Ferraris up and running. Average full time dealers make a good living, but not like that. Many part time dealers, the ones that tend to set up at small local shows, often barely pay their expenses, but enjoy the activity enough that break even, plus gas and lunch money is an okay show.
<< <i> Many collectors have observed dealers buying off an auction site, and marking up 30%, 40% even 50% on $1000 value coins. >>
My experience has been more in the 100% area. Dealers buying at auction and selling for 100% markup, and if they can sell them for that, great!
No one has twisted my arm and forced me to buy their coin, not yet anyway.
Many members on this forum that now it cannot fit in my signature. Please ask for entire list.
Actually, we don't pick and choose what comes into a Brick and Mortar. We are competing with the other dealers as well as selling back and forth with them. It's competition. Like a football game with four quarters.
``https://ebay.us/m/KxolR5
The majority of info on greysheet is pulled from dealer to dealer trades. Dealers who specialize in those tough popular series are never going to throw out a buy on these types of coins and raise the prices on the greysheet. This in effect leaves quite a wide swing in the wholesale/retail spread. I always have a big chuckle when a typical retail greysheet buyer comes up and thinks I should sell a coin for greysheet ask that I paid nearly triple bid for! Even funnier is when 1 comes up with a bluesheet....sure I can sell you a coin for bluesheet...but I usually don't carry that quality...I can probably locate you 1 next week. You do realize bluesheet is sight unseen and there is no return priveledge....I most certainly will be selling you a piece of plastic and not a nice coin!
I personally think most of the movement you see on generic monthly supplement type coins are driven by littleton's bids.
<< <i>Dealers who specialize in those tough popular series are never going to throw out a buy on these types of coins and raise the prices on the greysheet. >>
I was going to raise this in my first post, but figured I'd already prattled on long enough.
The other aspect I'd like to raise on this topic, with the intent to educate both myself and hopefully supplement answers to the OP's questions, is what is the impact of the CCE on what's available to dealers, and at what prices they can buy and sell at? From the snipets I've picked up (not being an inner circle guy), is that is a far more useful tool to the pros than the Greysheet.
No Way Out: Stimulus and Money Printing Are the Only Path Left
The great majority of coins sold on my site are either consigned by valued clients or have been purchased by me from other dealers and were purchased because I believe that my clients are looking for pieces with the qualities that these coins possess. It is exceptionally rare for me to purchase coins from the public and list them on my site since few coins offered to me are consistent with what I list and what my clients are looking to incorporate. My percent markup is also quite a bit lower than many numbers posted by folks in various threads or comments. Also, the great majority of the coins that I purchase never make it to my site as they are either offered directly to clients where I think there is a match or they are sold to other dealers who might need the coin, too. I work hard to carve out a niche as a person who handles quality type coins in all grades and price ranges, but if you strive to be fair to those you buy from as well as those you sell to then there might not be much left over.
In honor of the memory of Cpl. Michael E. Thompson
<< <i>Dealers who specialize in those tough popular series are never going to throw out a buy on these types of coins and raise the prices on the greysheet. >>
Well, it takes a lot of time and effort for me to figure out what coins are worth, and I consider that to be proprietary information that I don't share with anyone, let alone give it away so that everyone can read it on the Greysheet. If the Greysheet wanted to, they could do the same research I do, and come up with similar pricing information. But they don't do that.
An authorized PCGS dealer, and a contributor to the Red Book.
<< <i>I do not frequent B & M's even though there is one less than a 100 yards from my home. I could walk there if I choose. >>
lol I hope so.
<< <i>
<< <i>I do not frequent B & M's even though there is one less than a 100 yards from my home. I could walk there if I choose. >>
lol I hope so. >>
``https://ebay.us/m/KxolR5
<< <i>I would like to know how dealers are able to buy quality coins for prices low enough to be able to sell for a nice profit.
I have assembled a United States type set from the half cent to double eagle and have carefully chosen each coin so that I have a presentable type set. The set focuses on problem-free 19th century coinage, most of which are PCGS or NGC certified. I have also begun a set of Indian cents and large cents from 1816 to 1857. I've noticed some coins are very difficult to obtain at Greysheet values, for example, the 1857 large cent. It appears early problem-free 19th century coins in PCGS or NGC holders can also be difficult to obtain at Greysheet prices.
I have had discussions with coin dealers who claim to never pay above Greysheet for ANY coin. For example, I gathered dealers' selling price on a late 18th century coin for my type set. I will share no details in regards to what the coin was, but the Greysheet value was one thousand dollars and is a coin that is in high demand.
Dealer A has the coin for $1200, but it is ugly
Dealer B has the coin for $1300
Dealer C has the coin for $1400
Although the coin was valued at $1000 in Greysheet, I purhased coin B at $1300 and am happy with it. This is the same coin that a dealer told me he would have to pay less than Greysheet so that he could sell it for a profit. How would a dealer go about locating a nice type coin for less than Greysheet for a nice profit when he 'flips' the coin?
Where do dealers find quality, eye appealing coins for less than Greysheet? Are dealers able to buy nice coins for low prices and a handsome profit on resell, or do most dealers try to sell a high volume of coins at low markups for a handsome profit? Are most coin dealers wealthy? How much is the typical markup on a $200 coin? How much is the typical dealer markup for a $500 coin? How about a $1,000 coin?
Back to my 1857 cent, I did plenty of research and concluded that Greysheet has NO correlation to the actual value of a problem-free, attractive 1857 large cents. A dealer told me that if he were to buy the coin, he would pay 75% of Greysheet as that is his general rule for buying ANY coin. That leads to another question. How do dealers who are a slave to Greysheet stay in business? Most people who can afford nice coins aren't the type of people who become so desperate that they are willing to accept pennies on the dollar for immediate cash and are usually concerned with their ROI (return on investment).
As a collector, should I expect to never recover the money I've spent assembling my collection if and when I decide to sell? I know there are dozens of factors to consider into the equation and that this is a hoby rather than an investment, but assume I haven't been buying fake coins are a bunch of garbage coins that no one else collects or has any demand for. Once I've sunk thousands of dollars into somthing it's comforting to know I have a marketable asset.
I know every collection has its 'hits and misses' with some coins being great buys while others were over paid for, but at how do dealers buy and sell and at what markups do they usually buy and sell? >>
Honestly, it came out of nowhere. The saving grace is being situated between the largest bullion dealer in Nebraska and the largest Pawn Shop in Nebraska, on the route to the College World Series.
``https://ebay.us/m/KxolR5