Dealing: whats the BEST strategy?

matteproof · October 1, 2003 9:44PM

What does it take to run a successful coin business? Is it a better strategy to sell lower priced coins and look for volume to make a profit? (say, coins in the $50-$150 range). Or, is it better to offer bigger ticket coins and look to make a wider spread on each coin? (coins in the 1k plus range). Would you say that the preferred strategy is to buy/sell many fifty dollar coins and make five or six bucks profit each, or to buy a few high end coins and try to make a few hundred (or more) profit on each? Last thought; which coins by series or date fit either of the category's above. Thanks! matteproof

izzy452 · October 1, 2003 10:01PM

I am not a coin dealer but if I were to start a business I would select both high ticket and lower priced coin for resale. Most important is to pick coins with great eye appeal. They will sell faster. Just my thoughts on the subject.

Walt

CarlWohlforth · October 1, 2003 11:49PM

Either strategy you suggest works. Legend, Pinnacle, Whitlow and others tackle the high end market. Those who take out full page ads in the trade rags tackle the volume market. It helps greatly if you specialize.

matteproof · October 2, 2003 5:35AM

Thank you Izzy and Carl. I appreciate your input.

matteproof

relayer · October 2, 2003 5:38AM

The trick is to sell them for more than you paid for them.

Placid · October 2, 2003 5:39AM

Buy raw common coins then AT them with a blowtorch and sell them on eBay

matteproof · October 2, 2003 5:45AM

<< The trick is to sell them for more than you paid for them.

>>

Hi Relayer. What do you think is the best way to do this? Key date low grade? Key date high grade? Common date Morgans in mass? Key Date Morgans in less mass? Thanks!

matteproof

matteproof · October 2, 2003 5:49AM

<< Buy raw common coins then AT them with a blowtorch and sell them on eBay

>>

Hey Placid. The only time I ever went near a blowtorch (in high school shop class) I learned that me and blowtorches don't mix very well.

Thanks! matteproof

kieferscoins · October 2, 2003 5:52AM

Key date low grade? Key date high grade? Common date Morgans in mass? Key Date Morgans in less mass?

I would stay away from the common stuff like Morgans in mass. You won't make much money since everyone has them and everyone wants to sell. If you can try to sell semi-key coins in collector grades (not low, but not pop tops either), I think you could do ok. Have good pictures, return policy and honest descriptions.

Cameron Kiefer

matteproof · October 2, 2003 6:00AM

<< Key date low grade? Key date high grade? Common date Morgans in mass? Key Date Morgans in less mass?

I would stay away from the common stuff like Morgans in mass. You won't make much money since everyone has them and everyone wants to sell. If you can try to sell semi-key coins in collector grades (not low, but not pop tops either), I think you could do ok. Have good pictures, return policy and honest descriptions.

Cameron Kiefer >>

Hi Cameron. Thank you for the great thoughts. You are a very smart guy.

matteproof

Bustman · October 2, 2003 6:05AM

<< The trick is to sell them for more than you paid for them.

>>

Oh, thats what I have been doing wrong!

Placid · October 2, 2003 6:08AM

Some people take out ad's in their local newspaper for buying coins.
You will need to become good at grading and spotting problem coins.

relayer · October 2, 2003 6:27AM

<< What do you think is the best way to do this? >>

Know your market.

Since a coins value is based on its condition and rarity, become skilled at grading.
Follow market trends to see which coins are undervalued.
Figure out what your competitive advantage is and exploit it.

poptopsRus · October 2, 2003 6:29AM

We are a full time coin shop with a store front and we also do shows and the internet. Here's what we have found:

1) Try to buy everything that comes in the door that is for sale.
2) Treat everybody fairly (both buying & selling) and business will increse from word of mouth.
3) Shows are a great way to buy stuff you need for your better customers that don't walk in the door everyday.
4) Don't expect to get rich in this business, it just ain't gonna happen!

mgoodm3 · October 2, 2003 9:09AM

It would seem to me that trying to stay in the medium price
ice quality stuff would attract the most serious colectors. Keep some higher ticket items and cheaper stuff around for special occasions.

lordmarcovan · October 2, 2003 9:22AM

As a small, part-time dealer in the mall here, I sell stuff in the 10-cent to thousand-dollar range, with the vast majority of my inventory being under a hundred dollars a coin. Only a few gold coins and some of the nicer early type coins will be in the $100-500 range, and only very seldom do I put anything worth more than $500 in the case. I do bill myself as a dealer "for collectors of all ages and budgets", and try to live up to that.

My best selling bulk items by far are my 35 cent or three-for-a-dollar coins, which are mostly foreign, though I do put some war nickels and such in the mix occasionally. These outsell even my cheap 10 cent or twelve-for-a-dollar mix, probably because I take the time to put them in 2X2's and attribute them, while the really cheap stuff is just loose in a box. Generally I have from five to ten cents in each coin, plus four or five cents in the 2X2, plus the time it takes me to label each one. I roughly double my investment on every one that sells, and in the course of a month, that adds up. So it pays to have some cheaper "junk box" stuff out there- I find that draws people in. After they've pawed through the cheap coins in the bargain bins, then they're more likely to look at my better stuff in the case.

matteproof · October 2, 2003 11:22AM

Thank you Jared, LM, MGgood, and all the others for your great thoughts. It is much appreciated. As a pure collector, I've noticed that the coins I've bought a long time ago (aged inventory?) have gone up in value. Stuff that I buy today will take more time to catch up. It seems that the hardest part of being a true coin trader is figuring out how to repeatedly make a meaningful profit tomorrow on a coin(s) that was bought today. In other words, you have to find the "sweet spot" of paying just the right amount when buying, and accepting just the right amount when selling; all the while being FAIR and courteous to both the Seller and Buyer on both sides of the transaction. Not an easy juggling act if one is bent on EXTREME courtesy in transactions. Especially when one has to constantly go out and do it all over again (and again, and again).

Generally speaking, the profit seems to be on the buy side of the transaction. You can't pay too much when buying. It seems that one has to be highly focused on buying right while simultaneously remaining FAIR to the Seller. At the same time, one musn't be bashful to ask a price (and stick to it) with a buyer. I myself have never hesitated to pay up strong for NICE coins - and some not so nice ones too (as my fair share of body bags illustrate).

Thanks again for the input. matteproof

morganbarber · October 2, 2003 12:35PM

Just churn a bunch of low end crap--Like Anaconda

LincolnCentMan · October 2, 2003 1:10PM

My honest opinion is that volume is a hard way to make a buck; especially concidering E-bay fees. I tried it once. E-bay was makeing more than me and I was working too darn hard. Now I concentrate on coins in the $100-$500 range. I'll go into the K+ levels frequently, but $100-$500 is my bread and butter. I like that range for two reasons. First, it's something that I can afford to absorb and sit on for a while. Any time you buy something with the neccessity of a quick sell, you're asking for a loss. Second, most collectors can afford them. Even if they have to step up to the plate at their current collecting level, that coin is attainable to them.

However, if you want to look at the "guys" at the top of the market... what do they typicaly deal in?

David

matteproof · October 2, 2003 9:57PM

Hi David. Thank you for the great thoughts. You said; "My honest opinion is that volume is a hard way to make a buck; especially concidering E-bay fees. I tried it once. E-bay was makeing more than me and I was working too darn hard. Now I concentrate on coins in the $100-$500 range." I agree totally. It's hard to figure out how someone can sell coins in the ten to fifty dollar range on Ebay and make it worthwhile. It's alot of work taking photos, writing html, writing a description, waiting for the bids, answering emails, waiting for the payment, packing the coin, shipping the coin, leaving the feedback, etc...

Your points about the $100-$500 range are excellent. If you can make 10% on a $500 coin (fifty bucks) and sell a decent number per week, it wouldn't be bad. The problem is that one would need to consistently replace those coins as they sold. That would mean spending as much time (or more) looking to buy as trying to sell. Two hats! One needs to be very proficient at both. Thank you again David.

matteproof

matteproof · October 2, 2003 10:07PM

<< Just churn a bunch of low end crap--Like Anaconda

>>

Hi morganbarber. It's too difficult parting with any coin - let alone really NICE ones.

matteproof

OnlyBuffalos · October 2, 2003 11:03PM

For someone just starting out as a dealer, the number one thing that is absolutely essential, is to know how to grade the coins that you will be dealing in. If you can't do this, you will absolutely fail in your venture. Take the time that is necessary to do this. There are no short-cuts. Invest in a grading set(s) that you can use as a reference.

Initially limit your scope to one or two popular series that will provide you some "action". For example Buffalo nickels, Liberty walkers, Lincoln cents, etc.

The most difficult part will be finding properly graded coins at fair prices that will enable you to make a profit. Let people know that you are buying coins. While it is possible to acquire "nice" coins on Ebay, there is a great deal of competition and many pitfalls. Join a coin club in your community. Go to local and national shows. Advertise in local newspapers and the telephone directory. Establish a regular presence at a local flea market -- this works very well for low and mid-price raw coins even though it starts out slow. It is again essential that you know how to grade and can spot counterfeit and doctored coins. Be very wary of gold coins. Buy "junk" silver coins and post your buy price. Have an assistant present at all times. Be able to say "no".

Don't expect to get rich overnight. Set realistic goals and have fun. You will meet all kinds of people which it itself is a priceless education.

matteproof · October 3, 2003 4:12AM

Hi OnlyBuffalos. Thank you for the terrific thoughts. I agree with you that grading skills are key (whether collecting or trading). My grading skills in certain series (Seated for example) are up to task. Unfortunately, my grading skills on buffalos, Lib Nickels and certain other series are not as good. Do you think Seated material has enough of a "following" for specialization? I suppose Morgan Dollars and Lincoln Cents are the most popular series (though I'm not sure). The only Lincoln Cents that have ever interested me greatly are Matte Proofs. The business strikes never caught my attention as much.

My "crackouts" have been pretty good overall. I would say about half have graded the same or better. I used to get nailed with body bags (mostly AT) but this has greatly diminished as I've become more selective with my raw purchases and submissions. Now, I can usually spot an AT coin a mile away - though this took quite some time to discern. This board has been tremendously helpful on the AT issue. I've never had a problem recognizing cleaned coins, though "whizzed ones" have zapped me twice.

Do you think Ebay is enough as a Selling venue? Or, is getting a "booth" at shows (local and otherwise) a necessity? Thank you again for your great comments OnlyBuffalos.

matteproof

numonebuyer · October 3, 2003 4:44AM

Dealing seems to me (as a collector) to be a tough business. I don't know how they make enough money to live. Between the shows (which seem to be very expensive to me) and expense of preparing the coins for sale (displays, holders, labels, etc.) I don't see how they make it.

I have only been to a couple of shows, but I walked around to every table that had a Morgan displayed and just listed and looked. No one knows me (by face) from Adam. No one tried to strong arm me and only a couple really tried to strike up a conversation. How do you make any money like that? No one said "I see you are interested in Morgan's, would you care to sit down and I can show you what I have." Which by the way is always more than they have on display.

I had one PCGS-certified Morgan for sale, but no one was interested. No one even made me an offer. Again, how do you make any money like that.

I picked up a few business cards, but again, not every person had a business card. How do you make any money like that?

I was also intent on buying one particular PCGS-certified Morgan. I ended up buying it from the friendliest person at the whole show. That is how you make money. His coin was not the highest grade for the type, but his price was what I was willing to pay for what I got. I now have his business card and have been in contact with him via email since.

In summary, be friendly, be professional, do not prejudge who is on the opposite side of the display case from you. If you want to build a customer base, then do what it takes to make that happen. Then, in the lean days you can call or email your clients and say "I have this coin or that coin".

I hope this helps from a buyers/collectors perspective.

Numonebuyer

Nysoto · October 3, 2003 5:04AM

I am not a coin dealer, but I play one on TV. I would only enjoy dealing in coins that I have and interest in, an example is Sheridan Downey who specializes in bust halves.

OnlyBuffalos · October 3, 2003 6:16AM

matteproof, to answer some of your questions:

There are quite a few collectors for Liberty Seated coins. One problem with this area will be acquiring them from other than shows, Ebay and other auctions. You will likely not have people contact you to sell their wares. I would think you would have to deal in fairly high end (XF or better) material to make a go of it. I believe you should get your feet wet in a more popular area to start. I chose buffalo nickels because many people still have them salted away and once they see what they are worth, they are often willing to part with them. Also most circulated buffalos have held their value through up and down markets. (Another story for very high end Buffalos --- they can be volatile price-wise.) Even if you have some that sit in inventory for awhile, they likely will appreciate somewhat.

Another nice thing about Buffalos is that I can give away a few in a holder to a customer's child and 75% of the time that child will want more and if they do, I believe I will be the first person they turn to. I don't do this to every customer but you will develop a feel for whom to do this to. However every customer's child does get at least one buffalo. I do not have a problem getting these give-away coins as almost every collection I buy has more than enough.

Always try to buy the whole collection if practical. For some reason if you offer to buy the whole collection, people will sell as they do not want to go through multiple transactions. Also if you only offer to buy selected coins, they will almost always seek another buyer.

When collectors have buffalo nickels and also coins that I am Not interested in, I offer to buy all their buffalos and explain that they can get a better deal on the rest of the collection at dealer X who knows that I refer coins to him. I tell the seller to take dealer X's card which I sign and tell them to show dealer X the card and he will give them his best offer. Dealer X will tell the seller that I can give them the best deal on Buffalos as that is my area of specialty and that I have quick turnover on Buffalos which allows me to offer more for Buffalo nickels which is indeed factual.

I also know what other dealers are offering for the coins I buy. It doesn't hurt to have a current issue or two of CoinWorld handy for the potential seller to know what the market is like. I have the coins that I am buying highlighted so the seller can quickly see what the current buy prices are. This is a big advantage as those prices are usually below market price for even average coins and I can easily match and more often than not, top the CoinWorld offer. There are always offers to buy buffalo nickels in CoinWorld.

Be prepared to discuss what cleaned coins are and why they lower the value of a coin. It is helpful to have some cleaned coins priced in inventory to contrast the value of a cleaned coin versus an "original" coin. Again you will not have a problem keeping an inventory of cleaned coins -- they are ubiquitous.

Your question on Ebay. I suggest you look through the archives as there has been much excellent advice offered already. A few of my impressions on Ebay selling:

Coins that close on Saturday night seem to bring higher prices.

Coins that close during major coin shows bring lower prices. Same for a week or two afterward. A good time to buy???

For better circulated coins, PCGS and NGC coins sometimes yield far more than they should. Seldom less.

Never sell a better raw coin on Ebay (arbitrarily a $200 or better coin) that can potentially be slabbed by PCGS or NGC. For somewhat more expensive coins that are correctly graded in non PCGS and non NGC holders, crack them out and submit them to PCGS or NGC. (Need to be sure of your grading skills.)

PCGS coins yield the best prices more often than not versus all others.

You will get better results on average with a low starting price, than a high starting price.

If your original buyer turns out to be a dud, don't relist the coin immediately. Offering it to the second highest bidder, seldom works out well. Non-paying bidders are a plague on Ebay sellers.

Use PayPal on selected items. Many potential buyers won't bid unless they can pay via PayPal.

Provide accurate descriptions and multiple clear photos/scans. Not doing this is throwing money down the sewer. Large clear photos/scans optimize your yield.

Have a stated return policy.

If a coin has a problem(s), identify it in your description especially if you are selling a higher priced item that is BB material. These coins do sell if you point out the reason why the coin won't slab in PCGS/NGC. Cleaned coins do sell well especilly scarce material. Be totally honest in describing what you are selling.

Be curteous and professional even if someone gives you undeserved negative feedback. It will happen, it goes with the territory. Just calmly explain your side of the story in a factual manner.

Keep reading these boards as they contain good advice. I learn a great deal from them.

PFgold · October 3, 2003 6:29AM

It really depends on how comfortable you are with the coins you purchase in the event your business isn't going as well as you planned... If you buy quality coins with great eye appeal you can't go wrong, and you'll have much more liquidity in mid to low range prices than you will on very expensive coins... JZ

matteproof · October 3, 2003 7:13AM

Hi Numonebuyer. Thank you for great observations. I too am a collector and for me there is NOTHING more important than friendly and cheerful customer service. To me it is at LEAST as important as the coin itself. It is more important than price. I'm happy to pay MORE for superior and knowledgeable service. I also agree with your other terrific comments too. Thank you Numonebuyer.

matteproof

matteproof · October 3, 2003 7:15AM

Hi Nysoto. Thank you much for your comments. It seems that specialization is a very important thing. I know that I would certainly enjoy selling what I love (and understand) better than selling what I don't understand as much. I'm sure buyers (and sellers) would enjoy it more too. I'm thankful that so many coin series are meaningful to me; so getting to know each series better will be a joyful challenge. Thank you Nysoto.

matteproof

matteproof · October 3, 2003 7:23AM

Hi OnlyBuffalos. Again, thank you so much for your follow up and terrific input. I very much appreciate it. In the past, I've generally had great difficulty grading Buffalos for some reason. I have often been unsure distinguishing an AU from UNC. The lower grades have been a bit easier. I have a similar difficulty grading "incuse design" Indian gold too.

It is so true, as you suggest, that building customer satisfaction and loyalty is important. Fortunately, I would find this aspect of dealing to be one of the best parts of the job! I like your idea of buying "whole" collections too as it makes sense that such a Seller would not be interested in having his collection "cherry picked." I agree with your other excellent comments too OnlyBuffalos. Thank you again for sharing your thoughts.

matteproof

matteproof · October 3, 2003 7:34AM

Hello PFgold. Thank you much for your comments. I agree that it's very prudent to buy something that one doesn't mind keeping for himself if things don't go as planned. Your point about liquidity is also an important issue and I appreciate your reminding me of it. I love heavy duty rarities (don't we all) but from a "trading" aspect the high prices of such coins might make turnover slow down since not everyone can afford such wonderful pieces. I suppose it depends on the volume of business or trading that one seeks to accomplish.

Also, for me there is a "sadness factor" when parting with real rarity coins - regardless of how much profit one may potentially realize. Truly rare coins can sometimes be irreplaceable or nearly so. I suppose one must lose that kind of thinking when it comes to dealing/trading (otherwise one might never sell anything!).

Thank you again PFgold. matteproof

Dealing: whats the BEST strategy?

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