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How Do Dealers Handle Trades?
M4Madness
Posts: 137 ✭✭✭
I'm curious as to how dealers handle trades. Could it be as simple as taking the Greysheet values for both coins, and the difference between the two is what the person with the lesser valued coins pays in trade?
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Some dealers love trades because essentially they get to double dip, with the incoming material priced at wholesale what they outgoing coin is retail. Other dealers hate trades altogether, and think it’s too convoluted to even entertain the idea. I fall somewhere in the middle, I consider trades if it benefits me but at the same time you have to make sure that your records are in order for tax time, and trades can make that difficult if you’re not good with paperwork and record keeping.
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The usual is your wholesale price against the dealer’s retail price. The only exception is the dealer REALLY wants the coin you have. REALLY means an instant retail sale of a hard to find item to a very good customer.
Typically, they determine what they're willing to accept for their coin(s) and what they'd pay for the other party's coin(s) and calculate the difference. Those numbers can be very different from any published prices you might see.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
I figured that was a possibility. Lol!
The reason I ask is that I bought an 1885-CC Morgan in MS64 on July 25 (two weeks ago!) then decided that I want to build a circulated set instead of a set with a mix of mint state and circulated. PCGS values it at $1100 and Greysheet is $760. I'd hate to take a big loss right after buying it, and would much rather trade for other coins that I need for the set.
Trading coins with a coin dealer can be very similar to trading in a used car to a car dealer for a new car. In each case, the dealer can allow a high trade in price for your item, but offset that by asking a high price for theirs. Or they can offer their item at a low price, but allow you less in trade for yours. The numbers can be manipulated but the net difference is what counts.
If you asked me for an offer on an average quality MS64 1885-CC $1, I'd probably offer $775 at this time.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
I'd love a scenario where the dealer doesn't make a profit off me on both coins. Lol!
They double dip. The credit they give you towards your trade is wholesale price or even lower. The price they charge on the newer item is retail or higher. Regardless of whether it's wholesale or retail, rest assured they are making money on both coins.
“I may not believe in myself but I believe in what I’m doing” ~Jimmy Page~
My Full Walker Registry Set (1916-1947):
https://www.ngccoin.com/registry/competitive-sets/16292/
That's not necessarily true. Dealers will do trades that allow them to make a profit on one end and break even or even lose a little bit on the other end. It depends upon factors such as the particular coins and values involved, as well as how motivated they are to sell theirs or buy yours.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
It sounds like I need to sell outright then instead of trade. My plan was to try to trade for two or three lesser value coins, but wholesale on mine and retail on multiple coins would sadly kill the deal.
Yes, huge part of it is how much the dealer wants your trade material. If they are coins the dealer specializes in and is happy to sell, they may give you very strong trade value knowing that they're already doing well on the outgoing coin so they don’t mind if they don’t make much on the incoming. If they are coins they barely want to carry in the first place, you might take a beating. Evaluate on a case by case basis, there are no absolutes here.
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i would say its gonna be whatever the two of you decide on together what pleases you both and you are happy with
I need 1878, 1880, 1881, 1882, 1883, 1884, 1890, and 1891 Carsons in XF grade. With the exception of 1884, the rest seem to be in the $300 range in PCGS slabs.
That’s a pretty fungible coin that you might be better off just selling outright, rather than trading at wholesale and taking a big loss.
Trading works best for me when I have somewhat esoteric items that a specialist dealer wants, like tough Sheldon variety large cents.
The Morgan CC's in the 1880's (not 1889) can be more difficult to locate in circulated condition than it might initially seem. Not that they are not around at all. The reason is that the GSA contained a large % of the total mintage for them. The ones that were not part of the GSA and circulated could also have been part of the 'melting' of the (mostly Morgan) dollars.
1880 CC Mintage 591,000 GSA 131,529
1881 CC Mintage 296,000 GSA 147,485
1882 CC Mintage 1,133,000 GSA 605,029
1883 CC Mintage 1,204,000 GSA 755,518
1884 CC Mintage 1,136,000 GSA 962,638
1885 CC Mintage 228,000 GSA 148,285.
I did a sort on collector corner for Morgans, CC, grade VF30 to AU50. Link below. The sort jumps from 1879 to 1889. None shown in the 1880's at this time. I am sure there are some out there as this is a limited resource but I kind of expected to get some in there.
https://www.collectorscorner.com/Category/Category.aspx?catId=744&pId=2
https://youtube.com/watch?v=2YNufnS_kf4 - Mama I'm coming home ...................................................................................................................................................................... RLJ 1958 - 2023
1881 and 1884 are going to take some time to locate, that's for sure. I paid over value to get a VF35 1885, but that's probably the toughest year in circulated.
My collection as it stands;
1879-CC VF35
1885-CC VF35 & MS64
1889-CC VF35
1892-CC XF45
1893-CC VF35
On trades I take their coin at 20 pct behind CDN bid (if want it) and sell them mine at retail. Not the bank for them lol.
You would be better off trying to sell it on the BST than trading or selling it to a dealer. With how common those are, im not seeing a dealer making a strong offer to you.
Yeah. Why should he be able to eat?
Then the answer is simple. Do the work of selling your coin yourself and then pay cash to the dealer for the coin you want. BINGO!
In honor of the memory of Cpl. Michael E. Thompson
To answer the original question regarding trades with the public...I generally hated them and would only go through with them if the trading partner had something I really wanted. I would offer fair value for the trade and not try to make too much on the transaction, but the offered item had to sing to me. Otherwise, I was always willing to trade for cash.
In honor of the memory of Cpl. Michael E. Thompson
Suggest that you just sell it on the BST and then go shopping for the other coins that you want. You may or may not get what you paid for your coin depending on what you paid for it but you'll probably get more than what a dealer will offer as a trade in.
Worry is the interest you pay on a debt you may not owe.
In some cases it depends if you bought the coin from them. I have had good luck trading back the the original dealer. Best of luck. It is good to sell a few coins just to see how much of a hit you take.
Successful BST with BustDMs , Pnies20, lkeigwin, pursuitofliberty, Bullsitter, felinfoel, SPalladino (CBH's - 35 Die Marriage's)
$5 Type Set https://www.pcgs.com/setregistry/u-s-coins/type-sets/half-eagle-type-set-circulation-strikes-1795-1929/album/344192
CBH Set https://www.pcgs.com/setregistry/everyman-collections/everyman-half-dollars/everyman-capped-bust-half-dollars-1807-1839/album/345572
Just to clarify, this thread was in no way intended to vilify coin dealers. I was simply trying to understand their business model.
Simple: They want to sell not trade.
Don't they also need to acquire coins for their inventory?
Worry is the interest you pay on a debt you may not owe.
I think you’re probably better off selling your coin yourself unless it’s a thinly traded esoteric coin and you need the money immediately to purchase the new coin.
I had a dealer at a coin show wanting a particular coin of mine but we could not reach a mutual agreement on price. He the tried to offer me some trade material and I was just not feeling it. He asked for my email to try again at a latter time, but I just could not let her go.
BST transactions: dbldie55, jayPem, 78saen, UltraHighRelief, nibanny, liefgold, FallGuy, lkeigwin, mbogoman, Sandman70gt, keets, joeykoins, ianrussell (@GC), EagleEye, ThePennyLady, GRANDAM, Ilikecolor, Gluggo, okiedude, Voyageur, LJenkins11, fastfreddie, ms70, pursuitofliberty, ZoidMeister,Coin Finder, GotTheBug, edwardjulio, Coinnmore...
Usually take their trade in at x pct below bid. Otherwise not a deal for me. A lot of times they just dumping their mistakes, garbage. Look at these coins carefully!
So - Sometimes I may say “I don’t do trades I buy or sell coins.” May add “not buying right now.”
Then recommend they shop it around the room if looking to finance the purchase with it. Not the bank for their mistakes or coins.
That is quite a price differential between PCGS and Greysheet for such a common coin. Hope it works out for you!
I think I would junk the circ coins idea. It seems like a nice investment grade cornerstone coin for any portfolio. A trade behind bid would compound the expense of your decision get rid of it. Currently CDN CPG Retail is 973. So dealer A who pays 70 pct CPG offer wb about $680. His plan sell $975 (his best price on it) keep within plan margin of 30Pct Gross margin - 20 pct Opex = 10 pct Net income contribution on it of $98. Pays for him about 1.5 wk food expense. Sweet.
Sure. But they are only going to execute a trade if there is an advantage to it. A $ for $ swap doesn't generally accomplish that unless you're giving me a premium coin for a pile of garbage coins.
Obviously they're are 100 variations. Is it a friend or good customer? Have I already had a good show? Is it new for stale?
But the bottom line is that you can't eat inventory. A trade is never the 1st choice. I can buy whatever I want with cash. Unless you are giving me something I really want, it's simply not in my interest.
Well that's what a trade is, for tax purposes. Since it's a collectible, you don't even get to deduct any loss. So if you have three coins that you paid $90, $90, and $500 and you valued them equally in a trade for a $300 coin (and it is certainly possible to do a trade in which case each coin is valued separately) then you'd face a 28% gain on $20. Only Real Estate can you do "trades" tax free.
Usual disclaimer about consulting your tax professional.
I handpick every coin for my inventory based on eye appeal.
The trades people offer me never have eye appeal.
I do not not take trades.
I Buy.
I Sell.
You mean people don't ever want to trade DOWN? I'm shocked!
😇
That's exactly what I was trying to do, and even had a thread up in the BST forum to facilitate that trade. Lol! I was trying to go from MS64 to VF/XF. I couldn't find one here, so I had to pay an MS64 price for a VF35 -- and still own the MS64! Lol!
Yes. Your case was rather exceptional. A little more patience might have yielded something.
Patience was never my strong point. Lol! Circulated 1885-CC's in slabs don't show up for sale very often. My search of past auctions on Heritage yielded a handful over the past decade that were VF35 or greater. I found an old auction where someone had bought a VF35 (population 29), and as luck would have it, there was a "make an offer" button, so I did.
Apparently, 1881 and 1884 are going to be pretty tough in circulated grades as well. I may have to resort to tracking both of them down raw and sending them in to PCGS. I'm fearful of that approach, due to my ignorance of detecting fake/details coins and my limited grading ability.
This is the correct and best answer if you don't need the money from that coin to finance the next purchase.