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Overpaying for coins
stevepk
Posts: 238 ✭✭✭
My strategy at any coin show is to first browse the entire bourse floor, take notes, compare examples, and finally buy the best example for the price. Sometimes I can find several examples to chose from. Other times I may find only one or two examples on the show floor if it is a scarcer coin. I will often spend more money on a coin with exceptional eye appeal even though another coin in the same holder with the same grade has a lower price.
When I show coins to other collectors, dealers, or prospective buyers, I am always told that I overpaid. For example, I recently purchased an 1851 type 1 double eagle graded XF40 with pleasing surfaces. When I showed it a coin dealer, his reply was 'how much over melt did you pay for it'. Are some people able to buy type 1 Liberty Head double eagles for melt while I am overpaying? When I refer to Heritage auction achieves, I often hear 'well you know Heritage charges a 30% sellers fee, so your coins are worth 30% less than those sold by Heritage'.
Why is it that I am always told I overpay despite having a well thought out and patient strategy? Are there many collectors and buyers who look simply at the label and nothing more when determining how much a coin should sell for?
I suppose I could test my strategy by deciding to sell a large portion of my collection, but I would rather not do that. I've sold a few inexpensive pieces and did okay.
When I show coins to other collectors, dealers, or prospective buyers, I am always told that I overpaid. For example, I recently purchased an 1851 type 1 double eagle graded XF40 with pleasing surfaces. When I showed it a coin dealer, his reply was 'how much over melt did you pay for it'. Are some people able to buy type 1 Liberty Head double eagles for melt while I am overpaying? When I refer to Heritage auction achieves, I often hear 'well you know Heritage charges a 30% sellers fee, so your coins are worth 30% less than those sold by Heritage'.
Why is it that I am always told I overpay despite having a well thought out and patient strategy? Are there many collectors and buyers who look simply at the label and nothing more when determining how much a coin should sell for?
I suppose I could test my strategy by deciding to sell a large portion of my collection, but I would rather not do that. I've sold a few inexpensive pieces and did okay.
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Is "a coin dealer" who asks "how much over melt did you pay for a Type I double eagle" an active buyer and seller of Type I double eagles? Can he sell you a comparable coin for less than you paid for yours? If he can't, then his opinion is worthless.
Of course you wouldn't expect to sell a coin to a dealer or through an auction for the same price you just paid.
Of course you "overpaid" - people who buy really nice coins always "overpay" because premium quality coins sell for premium prices.
Unsophisticated collectors and dealers who just look at the label when they sell coins are probably people you should be buying from, but not selling to.
If you're a sophisticated buyer, then you just need to find other sophisticated buyers when you want to sell.
Check out the Southern Gold Society
Devil's advocate ... what if they are correct? Just because you browse the entire bourse floor and take notes, etc. does not ensure that you are buying coins at the right price. In fact, I've been at this "hard" for 32 years and I often do not even bother to search the bourse any more for coins when I am at some of the shows. Obviously, if there were "easy pickings" out there for "fire sale" prices, I would be spending a great deal more time hunting for coins there. But, this is just me and what I am pursuing generally.
Good luck!
Wondercoin
Lance.
if you know your series and do your research and are happy with your coin, no worries.
I have overpaid for quite a few coins.
The other reality is that anyone paying retail on collector coins is usually looking at a significant hit. How big depends on many factors, but there is almost always a loss involved. While that collector may not be "overpaying" vs. other collectors, they are paying much more than dealers are paying. The other side of that is dealers often buy in bulk and doesn't always get to hand pick their coins. The premium level dealers that do hand pick, charge much more, often multiples of the wholesale price that dealers that buy in bulk are paying.. Someone paying up for quality may still be in for a bath, perhaps just a bigger tub. Quality alone guarantees nothing. There is a price level where it becomes a white elephant, no matter how nice. Quality and price are on a curve. Each collector tends to find their own sweet spot on that curve. No matter what, though, the collector with a close relationship with a dealer tends to get a better deal than the walk up that doesn't know the dealer.
If a person is selling to other collectors, they might do okay. However, if a collector bought at a retail venue, selling to a dealer is usually looking at a loss, often a big loss.
One more point, don't believe everything dealers say. Many dealers have a large ax to grind, and that includes the forum dealers. Some maybe planting seeds in your head, with the end goal of you doing less business at other dealers, possibly more business with them.
P.S., those same folks yelling about overpayment would sing a different song if they were the seller. There's more B.S. on a BourSe than you usually see in a Texas Holdem game.
<< <i>No where is a mention of having favorite dealers, a relationship with specific dealers. The reality is that a walk up customer almost always overpays, especially if the coin looks at all desirable. Experienced collectors often have dealers holding coins back for them, because the dealers know their customers and know they will have a quick turn. A quick turn for a small profit is good news for a dealer, much better than waiting and hoping for the what is now a very rare walk up customer that doesn't have favorite dealers, that may be willing to pay retail price for a collector coin.
The other reality is that anyone paying retail on collector coins is usually looking at a significant hit. How big depends on many factors, but there is almost always a loss involved. While that collector may not be "overpaying" vs. other collectors, they are paying much more than dealers are paying. The other side of that is dealers often buy in bulk and doesn't always get to hand pick their coins. The premium level dealers that do hand pick, charge much more, often multiples of the wholesale price that dealers that buy in bulk are paying.. Someone paying up for quality may still be in for a bath, perhaps just a bigger tub. Quality alone guarantees nothing. There is a price level where it becomes a white elephant, no matter how nice. Quality and price are on a curve. Each collector tends to find their own sweet spot on that curve. No matter what, though, the collector with a close relationship with a dealer tends to get a better deal than the walk up that doesn't know the dealer.
If a person is selling to other collectors, they might do okay. However, if a collector bought at a retail venue, selling to a dealer is usually looking at a loss, often a big loss.
One more point, don't believe everything dealers say. Many dealers have a large ax to grind, and that includes the forum dealers. Some maybe planting seeds in your head, with the end goal of you doing less business at other dealers, possibly more business with them. >>
The above is all good. Several comments I would like to make:
1) Sometimes, the nicest example of a coin in the grade you find, even in a large show, is not a nice coin for the grade and is not worth buying. Unc. Barber coinage comes to mind. So do Bust $s.
2) If you've done your research and buy a nice coin for the grade, if you soon after sell it to a dealer who actively collects the series, you are going to be 15-20% on the short side; more if the coin can't be moved quickly.
3) As RedTiger wrote, just because you pay more for a nice coin for the grade is no guarantee you're going to make money when it's time to sell. Fifteen years ago, I paid a premium for an attractive for the grade MS 66 Seated Dime. I got it upgraded to an MS 66 + holder and added a CAC sticker, and I doubt I can get what I paid for it.
4) I might get flamed for this, but unless you're buying a truly scarce coin - something that if you let it go, you won't see another one like it for five years plus - I don't see a reason for paying a strong premium for it.
5) Selling a coin from time to time is educational.
"Seu cabra da peste,
"Sou Mangueira......."
It's a common practice among some dealers to bully collectors by degrading their coins or purchasing habits. The inference, of course, is "you could do much better with me." It's also common with collectors who wish to feel "superior" to make similar comments. That way they can show you how great they are with their purchasing prowess.
Plus, as a coin collector and not an investor or dealer, does it really matter if you "overpay" just a bit? Besides, there is overpaying and there is just paying silly prices for bad material, but it sounds like your strategy at a show is working and you are finding a good value for your money.
See http://www.doubledimes.com for a free online reference for US twenty-cent pieces
Don't worry about that. The rest of us collectors are not "on to" some great big scheme. We buy coins the same way you do... from auctions, from retail dealer sales, at coin shows. We haggle and bargain, but it's small amounts that are fought over. There's no secret way to acquire cheap quality coins.
Now as far as your specific collecting patterns, and whether you personally are overpaying for things, you might be best served by showing your recent acquisitions to an independent expert for an opinion, someone who has no interest in purchasing the coins. It may be eye opening, or it might re-affirm your current collecting practices.
Joseph J. Singleton - First Superintendent of the U.S. Branch Mint in Dahlonega Georgia
Findley Ridge Collection
About Findley Ridge
Maybe someone will come up with a robo advisor website for coins. 😉
I give away money. I collect money.
I don’t love money . I do love the Lord God.
But when it's ONE COIN at a time, a man doesn't need luck or the market to prove his brilliance.
<< <i>Dealers generally won't tell you what they paid for a coin, why should you tell another dealer what you paid. I don't sell often but when I do my first visit is always to the dealer I purchased the coin from when possible. It is hard for them to tell me I overpaid and keep my business and they understand that. >>
I love this. If it does one thing , its a testament to the rest of the world how thin the margin is on millions of "numismatic" items sold each year around the globe by "people". Dealer or vest-pocket hustler, or kid. Most people who KNOW what they're doing, do what they know best.
<< <i>When I refer to Heritage auction achieves, I often hear 'well you know Heritage charges a 30% sellers fee, so your coins are worth 30% less than those sold by Heritage'. >>
Anybody who says this is either dishonest or a moron. What some ignorant widow nets when consigning to Heritage at full commission is not what the coins are worth in the hands of an experienced collector.
Plenty of Heritage coins are bought by dealers who then mark them up and resell them. You can sell to these dealers at or near the Heritage price. Conversely, you can sell to collectors at or above the Heritage price. Although I have never attempted it, I think you could even sell most material directly back to Heritage for less than a 30% haircut.
Back to overpaying. I'm thinking most dealers are hobby collectors that got tired of getting their butts kicked. Being on the other side of the table allows to buy at much lower levels. A heavy commitment is required to make that work, one Im not able to personally make today, so I'm content with paying the freight on the one or two coins I buy a year. Also, when you start flipping coins for food and squeezing every last dollar out of them, it changes things. I've looked behind the curtain enough to know dealing would wreck it for me.
Sometimes if feels like overpaying but it's really just paying more than you want. Tends to happen when buying about anything. House, car, repair, etc. coins are no different, other than they're not a practical purchase.
Thanks for your thoughts too.
<< <i> When I refer to Heritage auction achieves, I often hear 'well you know Heritage charges a 30% sellers fee, so your coins are worth 30% less than those sold by Heritage'.
. >>
I have heard this ridiculous statement from dealers before. I wasn't sure if they actually thought that and didn't include it in their cost basis or they were trying to outsmart me, but last time I heard it I almost started laughing.
My Ebay Store
If I have to sell the coin before the market price has raised, I sell for the fair market price and suck it up. I don't reject fair offers and whine about how much I overpaid.
I'm not saying the OP is whining by any means, but there are others in the world who do so regularly and it's really annoying. Grow a pair, bite the bullet, etc.
Amat Colligendo Focum
Top 10 • FOR SALE
When you offer your coins to dealers (and I am one) they are looking for what they can buy to flip for an instant profit or at least something they can move quickly and make money on. I would not insult a collector by telling him he "overpaid" and IMO a dealer telling you you overpaid may be manipulation to buy it cheap (negotiation tactic).
So, perhaps you pay 5% more to a dealer after viewing a decent number of the same coin (if possible) on the bourse. You get to pick the one that has the most appeal to YOU. The key is not to overpay by 30%. Now, special coins are a different breed altogether. The best of the best will always be more expensive and the dealers will be reluctant to bargain much at at. That said, they are often the best buy. The one thing you cannot do is over pay for widgets. Again, if the coin is going into a collection, not to be sold in the foreseeable future you just need to be happy with the coin you have and the price you paid.
Just MHO.
Price is relative to many other factors... Eye appeal, quality, opportunity cost. If a rare issue, when will another become available Iif you can find multiples on the floor it probably isn't rare. An available issue with loads of eye appeal in an old holder is liquid even at "high" prices relative to average examples.
Latin American Collection
Coins for sale at link below
https://photos.app.goo.gl/TyJbuBJf37WZ2KT19
Consider the market price as the price of the coin, and the amount you overpaid as the price of being able to enjoy the coin in the comfort of your home for however many years you choose to keep it.
Amat Colligendo Focum
Top 10 • FOR SALE
<< <i>Why is it that I am always told I overpay despite having a well thought out and patient strategy? >>
Well DUH!
Stop telling them how much you paid!
The name is LEE!
1. There is always another buyer
2. There is always another seller
3. There is always another time to buy or sell a coin
.9 There is always another coin
Sure, if I have a long history of spending thousands and thousands of dollars with this dealer, the price might be reduced. Obviously, dealers love customers who spend large sums of money on their coins and often reward these loyal buyers.
But how does the casual or occasional buyer avoid paying full retail prices or even overpay for the scarce or popular coins?
In addition to having lots of free time, should we be booking flights to national shows or auctions, spending tons of money at expensive hotels and wining and dining with high profile dealers?
Hoard the keys.
Latin American Collection
<< <i>I guess I'm ok with paying retail for what I like. What the heck, I made some money and can spend it once in a while to basically delight myself.
Sometimes if feels like overpaying but it's really just paying more than you want. Tends to happen when buying about anything. House, car, repair, etc. coins are no different, other than they're not a practical purchase. >>
Yep. That's a good common sense appraisal of the matter. For instance, I picked up a couple of Big Macs recently to bring home. I hadn't bought any of those for close to a year probably and was surprised that they cost me $4.29 cents each, plus tax ( I remember when they were a lot cheaper)!
- Jim
mind you
she is a retired bank teller who only tended the counter...from 1950 to 1980
swapped face value for face value to compile her collection along with her pocket change
a fiesty one who has a point when it comes to this topic
<< <i>Dealers generally won't tell you what they paid for a coin, why should you tell another dealer what you paid. I don't sell often but when I do my first visit is always to the dealer I purchased the coin from when possible. It is hard for them to tell me I overpaid and keep my business and they understand that. >>
Always instructive to sell a coin to a dealer and see what they list it for.
MY COINS FOR SALE AT https://www.pcgs.com/setregistry/collectors-showcase/other/bajjerfans-coins-sale/3876
<< <i>.9 There is always another coin >>
Not if you collect UNIQUE major error coins ............
MY COINS FOR SALE AT https://www.pcgs.com/setregistry/collectors-showcase/other/bajjerfans-coins-sale/3876
"I almost always forget that I overpaid for a really nice coin, and I almost never forget, the ones I really liked but I let get away."
It took me years to learn this lesson. When you see a coin that "speaks" to you, it most probably will have the same effect on others should you ever show it, or sell it. Paying 10-40% more than sheet is not unreasonable. Look at auction prices on real nice examples of coins, and the prices for averages in the grade. You will see what I mean. Most people flail when they leave the comfort of the price guide. Sometimes price guides actually keep people from getting nice coins.
<< <i>I always tell people who are willing to listen....
"I almost always forget that I overpaid for a really nice coin, and I almost never forget, the ones I really liked but I let get away."
It took me years to learn this lesson. When you see a coin that "speaks" to you, it most probably will have the same effect on others should you ever show it, or sell it. Paying 10-40% more than sheet is not unreasonable. Look at auction prices on real nice examples of coins, and the prices for averages in the grade. You will see what I mean. Most people flail when they leave the comfort of the price guide. Sometimes price guides actually keep people from getting nice coins. >>
Armen - I have been collecting since the 1960s. I have seen five coins that 'spoke' to me. I agree, paying a premium for these coins makes sense, because you can go for years without finding another one exactly like it. But these coins are at least a step above a coin which is nice for the grade IMO, there are too many dealers -and you are not one of them - who will charge 3X auction archive pricing or more for a nice for the grade coin.
The buyer of the latter will be buried in the coin. To paraphrase your quote above, you won't forget what you pay for this kind of coin until you try to sell it.
"Seu cabra da peste,
"Sou Mangueira......."
When I was dealer I would always tried to give people an honest opinion. BUT if you kept coming back to me all the time to ask for opinions, and never spent any time looking at my coins seriously, I felt "used," and I would spend less and less time giving such people free opinions.
As for the issue of common date Type I double eagles in EF-40, that grade is getting toward to lower end of the collectable spectrum for those coins. Most collectors are really interested in Choice AUs with few surface marks, if they have a decent budget. The wealthy guys are looking for Mint State pieces. When comes to EF-40, that is getting toward the bullion oriented end of the collecting spectrum. I'm not saying that you bought a bad coin, but bear in made that most collectors are looking for more "meat" before they will pay a premium price.
<<It's a common practice among some dealers to bully collectors by degrading their coins or purchasing habits. The inference, of course, is "you could do much better with me." It's also common with collectors who wish to feel "superior" to make similar comments. That way they can show you how great they are with their purchasing prowess.>>
I cannot tell you how many times I have experienced this when trying to sell to dealers.
They are trying to intimidate you to sell it to them cheap and you take a loss. I do not sell to dealers directly.
I do work with a few dealers who are not like this and will sometimes consign through them.
Specialize!, join the club or society for those coins and sell there to other collectors. Sell on EBAY where a lot of collectors troll.
Know your specialized series well (what is nice and what is not ,what is available and what is not) and you will laugh at their
Ignorance. Lots of dealers then will not be as expert as you are. When I got to that point Dealers were trying to pick my brain
for my in depth knowledge. I knew when to pass on overpriced available coins when they tried to sell them as being scarce.
I knew when to buy a rare raw coin they thought was not special and I scooped it up while they were asleep in their knowledge.
Not everything is in specialized books . Sometimes its just years studying a series and constantly looking.
Krueger