The challenge of assigning financial worth to a coin by using auction results.
Coin Finder
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I am looking for an informative discussion about this. They way I see it auction results can be inconsistent. A particular piece could go for big bucks becasue of pedigree while the same coin without pedigree in the same grade and holder does not. Further, if two bidders need a specific specimen and bid aggressively the coin value may be skewed artificially high. Also what about tech issues, a bid doesn't get posted and a nice coin goes for cheap online! Any one of these factors could average up or down the worth of a coin if a mathematical average is used. Some auction houses are better at marketing than others as well, they may attract more bidders. These are just a few determinants that could affect "value" of a particular coin.
What are your thoughts? Is this the best way to price a coin for sale or to value it to buy?
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Comments
My thought is that the seller places a value on a coin. A prospective buyer makes their offer to the value of the coin and hopefully the two meet somewhere towards the middle. The coin is only worth what the buyer is willing to pay.
Previous auction prices are a good reference point when the "fluke" prices are eliminated. Then again if the market, all of a sudden, has several pieces added (a roll of MS 1912-S Liberty Nickels as an example), then obviously the price should go down, being that the coins are equal in quality. Additional emphasis must be placed on color, strike and sometimes variety.
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All of those are solid points. I would say that for generic material (say common MS 63-65 Morgans), there is enough auction data that one can throw out the outliers and still get a good idea of the market value. The issue comes when pricing better coins. Pedigrees, toning, freshness to the market are all subjective factors. The best you can do is look at the auctions as a foundation to your pricing. Then add (or deduct) some amount based on your own determination of the strength of the coin. If auctioning your item, see which venue provides the stronger results on average and sell there. If buying, set a goal in mind (based on scarcity, how much you like the coin, how much you can afford, how likely will it be that you need to resell it, etc) and stick to it.
Someone rating all the coins in auction would have some valuable info....
I agree. I believe you hit the nail right on the head.
Good points! In my opinion, you just have to get to know the market as well as you can. Identify which coins fit into the categories you mentioned and account for that. Then figure out the averages from there.
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"Outliers" occur in all large data sets. Good statistical analysis will account for them.
(For some very simple examples, look in the book United States Proof Coins 1936-1942.)
It's like anything else, the greater the sample size, the easier it is to spot and toss the outliers.
With more expensive coins, or where there is a big price gap between grades of a specific coin, if you or someone you know hasn't seen the coins, the question becomes one re the quality of a particular image, which is something on which I do not rely. This is why it's a good idea to have someone in whom you are confident who works at an auction house who can look at said coin(s) for you.
In fact, re the big price gap between grades, I'll go out on a limb and basically say that I need to see the coin. Ie., would you rely on an image to make the determination whether an MS 64 Seated Dollar may be undergraded? I wouldn't use auction results in this situation.
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Think like a dealer, buy and sell like a dealer. Unless you have a "for sure" cash buyer your valuation should be low. You don't want to be holding "long term" inventory in an era when collectible values for most items are in a state of slow, steady decline.
I think the OP is referring to coins with a small amount of public transactions. I have a real life example of this: I am offering a 1908-S VF30 $20 Saint for sale but having trouble finding a buyer because a dog ugly VF35 sold recently at a depressed or discounted price most likely due to its lack of eye appeal and who knows, maybe tech issues also. The point being a sample size of 1 can cause problems with valuation especially when trying to sell over the 'net (pictures only).
This is the OP's dilemma: For the seller (me) and any buyer it simply is not known if the 1908-S is in a bear market. The buyer needs to determine: Is it worth waiting to see if a tough to find key date will continue to decline in price or make a decent offer since many of these don't come around often in the "budget" price range. Sorry, no crystal ball here.
The value of a given coin can be nothing other than what another collector(s) is willing to bid or pay. I have bought $1000 plus coins on Heritage (frequently) and flipped them on Ebay for a profit.
In virtually every instance the Heritage coin underperformed....certainly compared to the price realized on Ebay. No criticism to Heritage as it took tremendous effort to locate the outliers. The coins that over performed on Heritage did not end up in my inventory.
Having said that, auction archives, are the best way to estimate value. Adjustments must be made for less recent sales as well as particularly high end or low end examples.
All of things you say about auction results are true, but at least there is a pubic record of the transaction. The beauty of "Coin Facts" is that you can see the results and eliminate the outliers.
This is the hardest of cases. Generally, in your case I would say it's perfectly acceptable to ask more for the VF 30. Some will see that the VF 35 sold for less, but those actively looking at this series will realize that the VF 30 is the stronger coin and that quality material doesn't hit the market too often. Eventually, the higher price will not stop a dedicated buyer. The issue arises if one wants a quick sale. Then the previous sale could hurt. However, in auction it could still do well with those that realize the coin is nicer than the previous sale.
Per the above, all coins of a specific denomination, mint mark, year, grade, and holder (did I leave anything out?) are not equal. A lot depends on how much the coin's owner wants to sell it, how much a potential buyer wants to make a purchase, and what else out there is available.
Auctions, Coinfacts, etc. provide a good starting point. Many here have commented that coin values, whether you are talking about six figures or two figures, are hurt when they are compared to unattractive coins for the grade in the same or similar holders.
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For insurance purposes, establishing a value for generic coins (1881-S Morgan in PCGS MS67) isn't too difficult. High-grade, condition rarity, high eye-appeal coins (Fabulous 1881-S Morgan toner in PCGS MS67) is another issue entirely, as they're each essentially unique pieces. Pedigree (or provenance) isn't nearly as important as the actual qualities of the coin in question.
What you paid for it is relevant, but an insurance company is going to have issues paying many multiples of what a generic version of a coin in the same holder would be worth. Price guides are always short on information when it comes to valuing unique pieces.
As a buyer I am really not interested in the worth of a coin unless I am interested in buying or bidding on it. In that case the "worth" of the coin is the agreed upon purchase price or the end result of an auction. It is hard to compare coins over different auctions as the coin isn't the same, the auction/setting isn't the same, and ultimately the bidders are rarely the same. You can get a good feeling for the value of the coin but ultimately it is up to the buyers of the coin to set the worth. The same goes for selling, a coin may be worth $100 to you but if your best offer you receive is $75 what is the value? To you it is $100 and to the market it is $75.
CAC coins usually have reasonable minimum prices with a larger pool of buyers, better liquidity. Do your own research on HA which has all the technical data most people need.
Statistical analysis (a field in which I was involved for many years) performed correctly and when enough data is available to make the resulting information meaningful, is very valuable. For dealers, it is necessary for good business decisions. For collectors, it is informative, but often superseded by "I need/like that coin.". Cheers, RickO