Numismatics, Net Worth and Collaterals
Numiven
Posts: 382 ✭✭✭
Just wanted to know some details on these topics, so that I am aware.
Do you include your certified numismatic collection/s (fair value or say 75% of market price) in your net worth?
a. If so, do you use a formal appraisal process (certificate) or a self estimate?
b. Does formal appraisal certificate prove any use?Can certified Numismatics collections be used as a collateral for any loans?
a. If so, any specific private lender / bank / dealer who specialize in this area?
b. If any experiences please share.
Thank you!
0
Comments
No
No
no and no
In reality in my view their real worth what realize on eBay if blew everything out at starting bid of 99c or melt. It's all about finding buyer who will pay the money.
Bankers concerned about financial / real estate assets. Many regard their bullion and numismatic assets as financial privacy asset whose bottom line valuation a secret. Revealing this would defeat its intended purpose or in reality would not even pay off their credit card debt.
No, and ... probably almost.
Wholesale value? Retail value? Something else? Just how do you really determine such a thing for collectibles?
Ive done formal appraisals on company letter heads for divorce proceedings to access real value, where a spouse splits and wants have the value of a collection per say, and they used my values, in order to have the other buy out the other half of the asset.
I saw where there is some firm that does loans on coins of substantial caliber, they advertise in one of the numismatic publications, but I don't know much about how it works
Ask your bank if they will loan you money on the value of your coins. Then come back and let us know the response.
No... and most likely no.... There will be exceptions to number two.... Such as certified, ultra rare items. Cheers, RickO
Narrow thinking will result in a NO answer to #2
Not all loans are through banks or "institutions"
Many loans are private
Bankers are loathe to take small, non-vehicle personal property as loan collateral because (1) taking the personal property into their possession (their collateral vault or a safe deposit box) means that the item could be lost or stolen while in their hands, and more often than you might think, upon the repayment of the loan, borrowers will claim that the smal valuable item isn't the same item as what they pledged originally; and (2) if the loan is defaulted and the collateral needs to be sold, collectors and dealers in that valuable item always always always try to lowball the bank. It is a classic game.
So bankers much prefer titled motor vehicles and real estate with a strong written appraisal. The value of real estate can fluctuate widely over time, but a borrower with a heart of larceny can't pick up the real estate and abscond in the middle of the night.
A man walks into a bank in New York City and asks for the loan officer. The man says he is going to Europe on business for two weeks and needs to borrow $5,000.
The loans officer says the bank will need some kind of security for such a loan, so the man hands over the keys and documents of a new Bentley Continental, parked on the street in front of the bank. Everything checks out and the bank agrees to accept the car as collateral for the loan. An employee drives the Bentley into the bank’s underground garage and parks it there.
Two weeks later, the man returns and repays the $5,000, plus interest, which is $15.41. The loans officer says: “We are very happy to have had your business and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked you out and found that you are a rich man. You have a good-sized house in up-state New York, a sizeable equity portfolio and no debt at all. We are curious as to why you would bother to borrow $5,000?”
The man replied: “Where else in New York City can I park my car for two weeks for $15!”
Successful transactions with : MICHAELDIXON, Manorcourtman, Bochiman, bolivarshagnasty, AUandAG, onlyroosies, chumley, Weiss, jdimmick, BAJJERFAN, gene1978, TJM965, Smittys, GRANDAM, JTHawaii, mainejoe, softparade, derryb, Ricko
Bad transactions with : nobody to date
The second question is almost definitely a "no" - banks will not generally allow coins as collateral.
The first question is not so clear. I recently asked for an account upgrade at a national brokerage. One of the things they wanted to know was net worth. I gave them a number. They called to ask some questions. They asked about my net worth. After talking, they insisted I include my coin collection in the calculation (I had not).
No and No.
Most of the things that I enjoy collecting, coins, firearms, guitars are purchased with my 'Mad Money'.
"When I Get Mad I Spend Some Of It."
Say your PCGS gold coins are worth about $100,000 (75% value of current auction records), is it prudent to include them in the net worth calculation?
$100k is not something to be ignored?
People who get in trouble with the federales over loan fraud against federally insured financial institutions are those who wildly overstate their financial position, not those who understate it.
Omitting a significant asset on a personal financial statement (balance sheet) is a matter of personal preference, conservatism and privacy.
I think depending on what your collection is and the size of the bank (small) they can and will lend against it. There is a category of loans called "non-conforming", which means the bank president can do what he wants. The Feds have really cracked down on those loans in the last 10 years, but they still exist. I live in a rural area where there are lots of farmers and watermen who can't/don't document parts of their business and still need to borrow...and since they, their fathers, grandfathers, etc. worked the same way a few bankers are willing to meet those needs.
I once gave an "Omega" High Relief to my landlord as collateral rather than a cash deposit. He was from another country and it made him very happy to hold it for me. I can still see his face when he had to return my "deposit."
It all depends on what the numismatics are and how liquid. $20 certified gold vs. esoteric small rare coins. Cac certified coins usually have a $ behind the sticker. So it really isn't that difficult to put value on a lot of numismatics, but good luck getting bankers to see value when they are used to real estate, stocks and supposedly easily valued and sold items. Actually many numismatics are more liquid with less red tape. So banker bias would appear to be irrational.
Depends on WHY one is calculating "net worth"?
For back of envelope, just curious math, sure, count what makes sense for you to count. Being realistic in terms of 'value' (net or transaction costs, taxes, etc) is recommended.
For actual, legal and financial planning Puposes, get professional advice.
For me. Coins and bullion fall under "personal property ", with cars, art, guns, etc, not financial assets such as stocks or real estate.
Liberty: Parent of Science & Industry
Real estate is not a "financial" asset.
With the notable exception of monetary stocks of gold, most financial assets are intangibles.
Coins are always so so so very liquid, until the moment that you want to sell.
Maybe your net worth is minus and you're losing money on your coins.
As long as you can generate cash flow, I see no reason not to borrow to buy more {(coins? food?)}
If the OP is talking $100K+ in "good" collateral, Spectrum's CFC is a likely source of financing at about 7.1%.
You can get a loan from a pawn shop, but you probably won't get very good terms.
Yes and yes
Sorry you don't agree with the word. Only meant that i can readily borrow against the assets on favorable terms.
Unlike the other objects mentioned.
Liberty: Parent of Science & Industry
Maybe I'm just in the wrong income class....
But what the heck use is Net Worth anyway? I've never had anyone ASK for that! Income, savings, debt load, sure. But Net Worth?
Seems like a piece of trivia calculated to impress people at your high school reunion.
I have. The coins were not used as collateral but to establish net worth in connection with a real estate loan.
Lance.
Yes. i include it as part of net worth but valuation is not specific. It is a range.
No. I would not use my collection to obtain a loan. There are better forms of collateral such as real estate and securities. I would lend against numismatic items but would likely charge a high rate of at least 5%.
“In matters of style, swim with the current; in matters of principle, stand like a rock." - Thomas Jefferson
My digital cameo album 1950-64 Cameos - take a look!
Sure I do. I also include my cash, other liquid assets and CERTAINLY bullion.
BUT.... not to really qualify as a "count on" asset for a loan or any conventional collateral consideration.
I took coin collections in on pawn many times. But the value I "assigned" to them as collateral was...um...REAL SAFE !!
Had a couple i ....really .... wanted to default.
But real coin people don't let their collateral go away.
Bullion, I loaned quite clearly. Figuring that my loan period here in CA was 4 months, I always factored in what I sorta expected COULD happen to the bullion in that time period.
Finding a pawn shop that is also a coin shop is always wise if borrowing against coins.
Pity the poor soul that loaned money at 5% on a roll of 1903-O Morgan dollars in 1962 before the Treasury release dozens if not hundreds of bags of them.
it's crackers to slip a rozzer the dropsy in snide
Net worth is sometimes questioned when assessing the financial strength when applying for loans especially related to secondary RE loans.
The lender takes into account all sources that are except essentials like cars, daily wear jewllery or primary residence etc., in assessing one's worth.
Including the 100k (fair value) of gold and silver numismatics might make the lenders feel better?
Networth = Value of Assets - Value of Liabilities
Your coins are certainly assets. As for loans, each bank will handle it differently. Some will care and others may not. If using as collateral, a professional appraisal would likely be requested. There are companies that issue secured loans with PCGS and NGC coins as collateral.
If you have every been asked to provide a potential lender with a personal financial statement (balance sheet) consisting of a listing of your assets and liabilities, well the final line of this statement (assets minus liabilities) is your net worth.
Everybody is asked for such a financial statement in conjunction with a residential real estate loan, but since not everybody understands the concept, the person helping you to fill out your real estate loan application may quiz you a bit on what you own and what you owe and fill out the form for you. If you cannot do this without some assistance, the person helping you to fill out the application will also use a credit bureau report to be certain that all liabilities get listed properly.
Net worth (and how it is derived) is often indicative of how complicated your financial affairs are. A person who has $20 million in U.S.Treasury bills bonds and notes and zero liabilities has a $20 million net worth and a strong, leverage-free position. A person who owns $40 million in rental real estate, several residences, a small farm, a portfolio of speculative stocks and only $20,000 in cash, and who in turn owes five banks a total of $20 million in loans also has a net worth of $20 million, but their financial position is much riskier than the first person which I describe.
If a potential lender asks for a financial statement, you are being asked to supply information on your net worth and whether or not you are worthy of a significant loan.
Yes, I have tracked the value of my graded coins as part of my net worth. I have been using 67% of PCGS value, and this has been conservative, based on the coins that I have tracked and sold in the past (including the recent past).
The value of my current coin assemblage is less than 1% of my NW so not a meaningful contributor.
1.) Yes, I count it at 80%
a. No formal appraisal, just PCGS valuation for certified, and grey sheet otherwise.
b. Not that I know of....
2.) Yes.
a. Pawn shops will be happy to hold your coins for loan collateral!
no & no.
and if you have to ask, don't collect coins
BHNC #203
The haircuts for little loans against numismatics would have to be high and requiring some diversification would be prudent.
I would say NO. However, someone mentioned an example of $100,000 in gold coins. My answer to that one would be: If you have $100,000 in gold coins, why do you care if they are part of your net worth? The only reason I can see someone caring is if their other assets total $900,000, and that extra $100,000 is good for theirr ego because it allows them to mentally know they are a millionaire.
Indian Head $10 Gold Date Set Album
As at least two other posters have told you, it is a factor that is considered when lenders decide whether to give you a high-value loan. This includes mortgages whether you are buying a home or merely refinancing to save interest. Anything that lowers your risk and could result in even a small interest rate reduction can translate into thousands of dollars in savings from reduced interest over long payment periods. That isn't an issue of having an inflated ego; it is an issue of making smart business decisions.
Hi,
reg 1a: yes in Switzerland they do that for wealth tax, I just gave them my own estimate.
reg 2a: yes, there are two very trustworthy dealers I know who are in this business. Its actually quite common to give loans again coins in collateral. Some dealer do this when they acquire expensive coins. Interest is high, its up to 12 pc per year.
no experiences from my end
Best
Even if one hasn't counted coins as an asset or used them for collateral it doesn't change the answer to the question. Yes and yes.
mark
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
1) Yes I think the value of all assets that have a cash liquidation value should be included in net worth. Just my opinion.
2) If you google "Loans on PCGS rare coins" looks like there are some lenders, one of the ones that shows in the search has been advertising as long as I can remember, but I have never dealt with them, so I don't know how expensive this kind of loan would be.