PCGS’ New Reconsideration Service

Caleb · November 30, 2012 3:11AM

Instead of derailing Tradedollarnut’s thread, I figured I would start a new one.

<< Reconsideration Service

Starting January 1, 2013, we are introducing the PCGS ‘Reconsideration’ service. This service is a direct response to all of you who have asked us to have a regrade service in which we do not break a coin out of its old holder unless the grade will go up. With this new service you can submit your PCGS graded coin for regrading but your coin will not be removed from its current holder unless it upgrades one full point or more (it will not be removed simply for a plus grade). With this service, the PCGS graders will grade your coin in its current PCGS holder (much the same as we currently do crossovers), and then if the coin deserves a higher grade we will reholder your coin in the new grade. If we don’t feel your coin deserves a higher grade, we will return your coin to you in its old holder. The fee for this service will be the usual regrade fee plus a 1% of value (based on PCGS Price Guide or the declared value whichever is higher) “Guarantee Premium” to take care of our increased liability on the coin. More details of this service can be found on our website at www.pcgs.com/servicesandfees/. >>

Whereas PCGS may receive a substantial windfall if a $250,000 coin gets an upgrade to a $500,000 under this service, are they still an independent third party grading service?

Just the fact that or the appearance that revenue can be generated by giving a higher grade to a coin may cause the appearance that an incentive exists for the grading company to upgrade the coin. I’m not saying that this would happen, but is the appearance there?

Furthermore, if a collector submits let us say a PCGS graded trade dollar valued at $150,000 under this service and the coin upgrades one point and is then valued at $225,000 does the collector have to pay the 1 percent fee on the full new value or just the increase of $75,000? I mean that the coin was already valued in PCGS plastic for $150,000 so should this be exempt from the “extra value tax”?

wondercoin · November 30, 2012 3:38AM

1% on all the value of the coin.

There are conflicts of interest or potential conflicts of interest throughout nearly everything one does in life. Disclosure of the conflict is a key as well as acting ethically and in good faith with the conflict or potential conflict. Then all is good in my book.

As always, just my 2 cents.

Wondercoin

LanceNewmanOCC · November 30, 2012 4:11AM

.
it is good to peel back the onion on subjects like this so we know if we desire to participate or not

i stated i had been waiting on this option for a while but knowing all the angles certainly makes one slow down

from what i can tell so far after years of announcements from our host and others, is that it is just slow at first and is eventually accepted.
.

vibr0nic · November 30, 2012 5:54AM

I understand the apparent potential conflict, but PCGS' integrity is fundamental to their reputation, isn't it? They make plenty of money as it is because of that reputation. They are not going to deliberately compromise all of that just for some added revenue through the reconsideration upgrade "tax".

AuroraRarities · November 30, 2012 6:18AM

I have the utmost respect for our hosts as well as the other first tier grading services. It is that respect and integrity which creates and sustains the value of their brands and products.

However, I must agree with the OP that directly linking grading to a percentage of value creates a perception of a strong motivation for the grading service to be less than impartial.

Similar perceptions in years past are one reason that some "lower tier" grading service products have not been as highly regarded. This results in those products having much less value.

I am genuinely concerned about the market's perception of this direct link between grade and value and its potential impact on the value of the brand.

If it is necessary to charge an additional fee it would seem most prudent to use fixed tier pricing as they do for everything else.

DoubleEagle59 · November 30, 2012 6:22AM

A very similar comparison can be appraising of diamonds and jewelry.

It is the standard of all gemological organizations to instruct their appraisers to charge a fee in accordance with their time spent on the item, NOT on the amount of the item.

Half an hour appraisal will cost you the same if it's a $1000 diamond or a $100,000 diamond.

DonWillis · November 30, 2012 6:23AM

There are conflicts of interest or potential conflicts of interest throughout nearly everything one does in life

Well said.

All the grading services are under tremendous pressure to grade coins higher. Why else would coins be resubmitted? The pressure is there day in and day out to upgrade every one of the many thousands of coins we grade daily. That is why there is a 'Chinese Wall' between the business side and the grading side of the company. Of course the graders understand why coins are being sent in but they are completely removed from any financial aspect of the submission.

Having a different financial model for a small fraction of submissions in no way will ever compare to the pressures that inherently exist in the business.

LanceNewmanOCC · November 30, 2012 6:26AM

<< I understand the apparent potential conflict, but PCGS' integrity is fundamental to their reputation, isn't it? They make plenty of money as it is because of that reputation. They are not going to deliberately compromise all of that just for some added revenue through the reconsideration upgrade "tax". >>

you underestimate the human race sir
.

lkeigwin · November 30, 2012 6:29AM

I think PCGS is smart enough not to overgrade a coin for the fee. After all, if the coin is later regraded and drops to where it belongs PCGS is going to be on the hook for a lot more than 1%.

IMO, since guarantee payouts by PCGS are not based on their retail price guide but rather some lower, "dealer valuation" then the 1% fee should also be based on that same lower value.
Lance.

vibr0nic · November 30, 2012 7:51AM

<< you underestimate the human race sir >>

Ha, it's not that at all - I simply understand that PCGS has a vested interest in maintaining their grading integrity and reputation. Those are arguably their greatest assets - they would be foolish to compromise either, and they aren't fools.

LanceNewmanOCC · November 30, 2012 8:20AM

<< 

<< you underestimate the human race sir >>

Ha, it's not that at all - I simply understand that PCGS has a vested interest in maintaining their grading integrity and reputation. Those are arguably their greatest assets - they would be foolish to compromise either, and they aren't fools. >>

i'm glad you saw the humor/irony. sometimes the words on a screen lose the precision context i intend them to convey.
.

coinguy1989 · November 30, 2012 3:04PM

While PCGS may have a greater regrade/reconsideration or crossover fee for crossing or upgrading coins on the basis of its increased value, its liability also goes up proportionally; thus, it makes sense that they would want an additional premium to cover their liability. As such, I understand the basis for the additional 1% fee. With this said, I think it would look much better if PCGS linked the values to an independent Price Guide rather than their own even though they are willing to negotiate on the price. While I do not believe that there is or would ever be any impropriety, I do fear that the greater market may not see the things the way I do. I think it would just be easier to put a monetary cap on re-grades or cross-overs (although personally, I'd like to see the old system left in place although I know this won't happen

). Any coin worth more $X (an amount that PCGS sees as a negligible liability), must be cracked out before submission and treated as raw. NGC has effectively taken a similar policy except that they require all non-PCGS coins to be cracked out prior to a crossover. I imagine that the liability was NGC's concern just as much as PCGS has a rational fear of liability for the higher end coins.

bidask · November 30, 2012 3:29PM

<< There are conflicts of interest or potential conflicts of interest throughout nearly everything one does in life

Well said.

All the grading services are under tremendous pressure to grade coins higher. Why else would coins be resubmitted? The pressure is there day in and day out to upgrade every one of the many thousands of coins we grade daily. That is why there is a 'Chinese Wall' between the business side and the grading side of the company. Of course the graders understand why coins are being sent in but they are completely removed from any financial aspect of the submission.

Having a different financial model for a small fraction of submissions in no way will ever compare to the pressures that inherently exist in the business. >>

I can attest in a positive way to the honesty of this PCGS model .

On the darkside PCGS was running a submission special this past year ( not sure if its still happening) which basically stated if someone submitted NGC or ANACS graded coins for crossover or regrade higher to PCGS they would only pay for the grading fee if the coin ended up in a PCGS slab.

I submitted about 40 NGC coins under this program.

Many were more expensive coins so the fee for grading ( if succeessfully crossed or regraded higher) would have been $55 or more.

Out of the 40 I submitted I believe less than half crossed or were regraded higher.

So with that result I certainly did not feel or believe that PCGS was tempted to cross or upgrade my coins to get the grading fees.

YQQ · January 20, 2013 3:03PM

MMM, interesting subject. makes absolutely NO sense for a consumer. But a lot of sense for the invoicing...
Are you all overlooking the fact that it is still exactly the same coin?
has the coin changed? did it miraculously become a better grade? or, what happened?
IF so, W H Y did it become a better grade????
Has the opinion of the graders changed?
And if so, the coin was not graded correctly the first time and one might have good grounds to ask the big question: WHAT, if anything has changed on the coin?
Have some detracting aspects suddenly become NOT important any more, or have details become sharper , or have the graders relaxed their positions?
Well guys, miracles do happen......right?
you all get what I am getting at here.

Personally I believe it is just another way to suck it to the consumer.

why should one have to pay for someone changing their opinion?
Because they did not do it right the first time?
NOT

amwldcoin · January 20, 2013 10:08PM

Look at it from the flipside...It could also give incentive to undergrade a coin on a regular submission! I see it this way....If a coin upgrades...especially a recent submission(I understand older holders and changes in grading standards over the years)...why should I have to pay another grading fee for a coin that wasn't graded correctly the 1st time,much less pay a commission or percentage on top of a grading fee I shouldn't have to pay! More incentive for shady profits this way in my opinion.

I'm not knocking PCGS but this new policy just doesn't seem fair or right. If it truely is a liability issue then why not just add a percentage of value to every coin graded? In a sense that already happens due to the different value based submission tiers!

I hope this doesn't get me in the doghouse...but that is the way I see it.

s4ny · January 21, 2013 12:06AM

CLCT is trading at 1/3 of its price of 13 years ago and pays a 12% annual yield.
The company needs to grow revenues.

They are thinking that all these coins in old holders
can be upgraded and become a source of additional revenues.

segoja · January 21, 2013 12:36AM

Dividend rate = $1.20/share
EPS = $.76

Something has to give

badhop55 · January 21, 2013 2:19AM

This does not sit well with me. I'm sort of ok with sending in a coin initially graded by company X back to company X for reconsideration and I'm willing (reluctantly) to pay the standard fees for this service but I have a big problem with factoring the value of the coin in the process. If you step back and look at the process solely from a logic standpoint such a coin being bumped up in grade is a tacit admission that a mistake was made by the grading service during the initial evaluation. Is the process different for a $100,000 coin vs a $100 coin? And if so what is done differently to warrant the increased costs? Are there increased handling costs for high value coins? The "value" of the coin has no bearing on how it grades. Or at least it shouldn't. Do the graders get a raw coin, determine it's value and then grade it? I would certainly hope not.

In essence this program tells me that if a coin is upgraded with this reconsideration service:

1. A mistake was made the first time around and I'm paying to have someone rectify their initial mistake.

2. The TPG is telling me if I'm are going to make more money because of the upgrade then they want a cut.

The logic escapes me.

This doesn't smell good.

magikbilly · January 21, 2013 2:36AM

"...we want to see your coin in the HIGHEST grade possible..."

Eric

Type2 · January 21, 2013 2:53AM

<< This does not sit well with me. I'm sort of ok with sending in a coin initially graded by company X back to company X for reconsideration and I'm willing (reluctantly) to pay the standard fees for this service but I have a big problem with factoring the value of the coin in the process. If you step back and look at the process solely from a logic standpoint such a coin being bumped up in grade is a tacit admission that a mistake was made by the grading service during the initial evaluation. Is the process different for a $100,000 coin vs a $100 coin? And if so what is done differently to warrant the increased costs? Are there increased handling costs for high value coins? The "value" of the coin has no bearing on how it grades. Or at least it shouldn't. Do the graders get a raw coin, determine it's value and then grade it? I would certainly hope not.

In essence this program tells me that if a coin is upgraded with this reconsideration service:

1. A mistake was made the first time around and I'm paying to have someone rectify their initial mistake.

2. The TPG is telling me if I'm are going to make more money because of the upgrade then they want a cut.

The logic escapes me.

This doesn't smell good. >>

Now put your salf in the sellers shoes if he or she sold it thinking it was a $5000 becuse some one graded it so and then some one resubmites it and get a point up and it go's to $20,000 who is going to pay the one that sold it 1st at the lowprice becuse of them or do they get the banana.

OldEastside · January 21, 2013 2:58AM

I may consider the service on a few that I know were Bulk Graded over a decade ago,
I don't really like the idea of the 1% deal allthough, But I guess thats the cost of business
these days, Also perhaps they could + them at no extra % charge.

Steve

badhop55 · January 21, 2013 6:43AM

So, they make money when they initially grade/slab a coin. They make money when they cross grade. They make money off their yearly subscriptions. And now they want to not only make money upgrading a coin they previously graded (incorrectly?) but they also want some of the proceeds up front at no risk to them (values can drop) of money the owner may realize in the future if the coin is sold.

That ugly word G***D is rearing it's ugly head.

derryb · January 21, 2013 6:59AM

the fact that an initial grading fee is the same regardless of grade yet a 1% additional premium is necessary for an upgrade because of "increased liability on the coin" smells of an incentive to initially lean towards undergrading a coin to minimize liability on the coin. Just calling it like I smell it.

Since grading is after all subjective, TPG guarantee should only cover authenticity and doctoring, not the subjective grade. This would greatly reduce guarantee payouts which would hopefully be passed on to the customer in reduced grading fees. Is it necessary to guarantee what is known to be opinion? The recognized professionalism behind that opinion is what should separate TPGs.

Any coin that upgrades should be done free of charge since the customer really didn't get the service he paid for the first time around. Charge more for the ones that don't upgrade in order to reduce frivilous resubmissions.

LindeDad · January 21, 2013 7:35AM

I have this really kind of ugly toned weakly struck coin that has MS 65 on the label can I get price guide value when it downgrades to where it belongs?

ebaybuyer · January 21, 2013 10:53AM

when the bottom falls out....

leothelyon · January 22, 2013 5:34AM

A coin has the same chances of downgrading as it does upgrading because the coin is being regarded. I can't believe PCGS
is starting a service that allows overgraded coins they had in their hands to correct and knowingly let them back out the door.

And I can't believe any of the posters here have not questioned this. And I'll apologize now if I missed something but I haven't
read anywhere what they will do for the coins that downgrade with this service.

WOW!

lkeigwin · January 22, 2013 6:18AM

I would be shocked to learn that PCGS wouldn't do something about a coin sent in for reconsideration that deserves a downgrade. I agree, this is something that should be cleared up.

Consider the collector who submits an OGH 65 for reconsideration, hoping for a 66. PCGS examines it and feels it should be a 64. If their guarantee applies to reconsiderations that deserve downgrades (and I feel it must), the collector will likely have a difficult conversation with PCGS. PCGS won't return his overgraded coin in its OGH 65 holder. It will offer the guarantee payout options: buy it outright and keep it, or downgrade it, return it, and pay for the lost value.

But suppose this collector just wants the coin back, in the holder and with the grade as submitted?

Could get ugly.
Lance.

(edit auto-correct typo)

s4ny · January 22, 2013 6:27AM

<< I would be shocked to learn that PCGS wouldn't do something about a coin sent in for reconsideration that deserves a downgrade. I agree, this is something that should be cleared up.

Consider the collector who submits an OGH 65 for reconsideration, hoping for a 66. PCGS examines it and feels it should be a 64. If their guarantee applies to reconsiderations that deserve downgrades (and I feel it must), the collector will likely have a difficult conversation with PCGS. PCGS won't return his overgraded coin in its OGH 65 holder. It will offer the guarantee payout options: buy it outright and keep it, or downgrade it, return it, and pay for the lost value.

But suppose this collector just wants the coin back, in the holder and with the grade as submitted?

Could get ugly.
Lance.

(edit auto-correct typo) >>

I would expect the coin to be returned in its original holder.

BAJJERFAN · January 22, 2013 6:28AM

<< A coin has the same chances of downgrading as it does upgrading because the coin is being regarded. I can't believe PCGS
is starting a service that allows overgraded coins they had in their hands to correct and knowingly let them back out the door.

And I can't believe any of the posters here have not questioned this. And I'll apologize now if I missed something but I haven't
read anywhere what they will do for the coins that downgrade with this service.

WOW! >>

They will only crack out coins for regrade/reholder that will upgrade. The only way that it would downgrade is if there was some hidden problem and I expect they will treat this the same way they would if the coin was in a competitor's holder.

TwoSides2aCoin · January 22, 2013 6:28AM

I told my girlfriend about this "reconsideration service". Haven't heard from her since.

TPRC · January 22, 2013 6:37AM

<< Look at it from the flipside...It could also give incentive to undergrade a coin on a regular submission! I see it this way....If a coin upgrades...especially a recent submission(I understand older holders and changes in grading standards over the years)...why should I have to pay another grading fee for a coin that wasn't graded correctly the 1st time,much less pay a commission or percentage on top of a grading fee I shouldn't have to pay! More incentive for shady profits this way in my opinion.

I'm not knocking PCGS but this new policy just doesn't seem fair or right. If it truely is a liability issue then why not just add a percentage of value to every coin graded? In a sense that already happens due to the different value based submission tiers!

I hope this doesn't get me in the doghouse...but that is the way I see it. >>

leothelyon · January 22, 2013 6:41AM

<< I told my girlfriend about this "reconsideration service". Haven't heard from her since. >>

Well, since she didn't slap you silly, at least you know you weren't being too cheap.

lkeigwin · January 22, 2013 6:44AM

<< I would expect the coin to be returned in its original holder. >>

And therein lies the problem. PCGS should not put a known overgraded coin, in their possession, back into the marketplace. But maybe they'll have no choice.
Lance.

s4ny · January 22, 2013 6:48AM

<< I told my girlfriend about this "reconsideration service". Haven't heard from her since. >>

You didn't upgrade and got a slow turnaround.

magikbilly · January 22, 2013 8:35AM

it was said in a video when the big three were announced (or was it two...) and I know I am NOT the only one who recalls it in here - I asked!

"..we want to get your coins into the HIGHEST GRADE POSSIBLE.."

NOT most accurate etc.

Eric

MFH · January 22, 2013 9:08AM

<< This does not sit well with me. I'm sort of ok with sending in a coin initially graded by company X back to company X for reconsideration and I'm willing (reluctantly) to pay the standard fees for this service but I have a big problem with factoring the value of the coin in the process. If you step back and look at the process solely from a logic standpoint such a coin being bumped up in grade is a tacit admission that a mistake was made by the grading service during the initial evaluation. Is the process different for a $100,000 coin vs a $100 coin? And if so what is done differently to warrant the increased costs? Are there increased handling costs for high value coins? The "value" of the coin has no bearing on how it grades. Or at least it shouldn't. Do the graders get a raw coin, determine it's value and then grade it? I would certainly hope not.

In essence this program tells me that if a coin is upgraded with this reconsideration service:

1. A mistake was made the first time around and I'm paying to have someone rectify their initial mistake.

2. The TPG is telling me if I'm are going to make more money because of the upgrade then they want a cut.

The logic escapes me.

This doesn't smell good. >>

Couldn't have said it better myself.

LindeDad · January 22, 2013 10:15AM

Well that was what I was wondering about what looks like a MS62 that says MS65 that I have? If upgrades are valued at "Price Guide" why not downgrades?

lkeigwin · January 22, 2013 11:12AM

If you have an overgraded coin there's no sense in using reconsideration. Just do a regrade which has no guarantee premium and there's no question about a guarantee payout.
Lance.

amwldcoin · January 22, 2013 11:57AM

<< Well that was what I was wondering about what looks like a MS62 that says MS65 that I have? If upgrades are valued at "Price Guide" why not downgrades? >>

PCGS Paid me full priceguide for a couple of steelie Lincolns in 67 that turned in their holders. Totally move them several bars up in my respect category!

oih82w8 · February 1, 2014 5:29AM

I just found this thread when looking for PCGS Reconsideration. I did not see anything in this thread about circulated coins. I seen that if your resubmitted coin increases one full point, it will be upgraded as such. But what if you have a presently graded F12? Does it need to go up to the nearest grade level of F15? That would make sense to me since there is no F13.

Just curious that's all. I also agree about the re-grading fee should be taken away, but I have no problem withstand the 1% fee for the difference between the two grades.

Great discussion.

amwldcoin · February 1, 2014 5:58AM

<< I just found this thread when looking for PCGS Reconsideration. I did not see anything in this thread about circulated coins. I seen that if your resubmitted coin increases one full point, it will be upgraded as such. But what if you have a presently graded F12? Does it news to go up to the nearest grade level of F15? That would make sense to me since there is no F13.

Just curious that's all. I also agree about the degrading fee should be taken away, but I have no problem withstand the 1% fee for the difference between the two grades. Great discussion. >>

I believe 1 point translates to the next recognized grade. They have now included just adding a + grade to a grade.

PCGS’ New Reconsideration Service

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