Dealer Practices.. ?

As a dealer I will very rarely offer a reasonable price on a coin unless I see it in real life. I sell numerous coins via the ebay market as well as through my shop. The problem you have is that I get a number of emails and phone calls telling me the coin or note is "uncirculated" or in excellent condition. When it shows up it is a dogs breakfast or just an average circulation junker. If an image of a coin is sent it may not show the full picture. Images are easily enhanced and if they are not lightling, angle of the coin and other factors will have an effect on how the coin looks. In a nut shell a lot of instances (not all) a seller will tell you it is better than what it actually is to get a better price...from experience it happens all to often so you just do not take the chance....the dealer needs to see in real life to give a price he/she is happy with.

The second issue here is the price they offered on $20-$50 coins. You are talking about coins that are not rare. Chances are they are coins most dealers have lots of. If you have lots of them the need for lots + 1 is just not there. It may even be a case the sales on the coins they have lots of are very slow even though they are a nice coin and sell for $50. The dealer may have little or no market for them or it could even be a case where most dealers have no market for them. The dealer concerned may have even just purchased a large quanity of what you have so has no need for them. A dealer will also price items in accordance to where they can get them cheaper. (I did a quote over the weekend on some coins that catalogue at $22 each. Latest auction sales were realising $9.00 each....recent ebay sales had them at $3.00 each. If I do not get them from my client at $3.00 I will just go to ebay to get them). I may need to consider selling them on ebay in the future or my market for that particular item is ebay so if ebay sales are weak and I still need to feed the family I will buy so I can make a profit on ebay. A $50 item will not drag someone into my shop and in the scheme of things is not a key item that will attract an out of the world price when a collector goes to sell. A $5000 item is an item most dealers would want on their stock list as it will attract customers as it is rare...therefore most dealers will offer a good price. Auction/ebay sales etc will reflect the percentage of retail that each item will get so expect that when you sell to a dealer.

Now the difference between brick and mortor shops and internet traders. Bricks and mortor shops do have more overheads. It does not mean they will pay less. From my experience the internet sellers offer less because most (not all...I know some very reputable internet sellers...many are members of this forum) are in it for a quick buck. They are often the ones that discount and really do not care about the industry because they are in it for a quick buck. The second issue is that the main source of stock for a shop is the public. If they do not offer competitive prices they go broke through lack of stock.

Lastly....do not be quick to judge the price offered from a dealer. I am not saying that the dealer you approached did not "rip you off" but if you are unhappy with a price...ask why the "low" price was offered. Any reputable dealer will give you an answer they can back up with fact. The shonky ones will not be able to. Just because you and the reputable dealer can not agree on a price does not mean it is a bad deal. It is a deal you can not agree on and this should not be held against the dealer. (There are at least two parties to a deal so you are 50% of the problem.) Both parties have to be comfortable with a price else one party is a looser...if there is a looser then it is a bad deal. I do not expect to close every deal that I am involved in....overall I close about 80% of the buy and sell deals I negotiate on secondary market items. The remaining 20% are just deals that never happened but are not necessarily bad.

I hope this helps you understand the the way a dealer thinks and look forward to your comments.

Bigfella
Great reply
I would now like to see what Bobby & Susan say about this topic

Tony, I am glad you got something out of my post. I hope other do too.

Good post Shane.
Very enlightening.
regards,

hi all,
Thanks for all the responses. Susan, I see, the profit margin is not that great. I do not mind a dealer making money but offering under 50% of retail is a little low. Don't you think? but I do understand exactly your point. As a dealer what is your opinion on a collector just becoming a dealer to further his own collection. Are the costs of being a dealer high enough to prevent this from being possible. I am sure alot of dealers started this way.? Not for me ^_^ just a question.

Thanks Tony

Thanks Tony

I am not going to say whether offering 50% under retail is low or not. Consider this however....is your idea of retail is the book price or what the market is actually doing....consider if the dealers market is ebay or auction then the real market could be only 50% of book value...take off a dealer margin of say 25% and you will get 1/4 of book value and in my opinion the dealer offered a very fair price.

Consider that in most retail (this is the Aussie market here but I assume it is consistant all over the world) for items under $100, margins can be up to 60%. In aussieland the margin on a can of soft drink if the retailer sells at RRP is just on 60%. If you say a dealer margin of less than 50% is acceptable on similar value items then the dealer is making less than a lot of other forms of retail selling items under $100. It appears that when buying most items the general public is happy to pay for these profit margins but when it comes to collectables I have heard customers say margins of 10% are more than acceptable. If this were the case their would be no coin dealers as we would all be bankrupt. You must always keep in mind a coin dealer is a retailer and must make similar margins to other retail enterprises because at the end of the day they have the same overheads as other retail businesses. The only difference is a coin dealer relies on stock from the public...most other retailers rely on wholesalers. I can assure you that me and most other dealers have margins less than than that of other retailers.

I agree you can't rely totally on greysheet. I've paid more than listed prices on many occasions if it has great eye appeal. What I didn't like in this situation was that his prices are over listed MS64 prices for the whole list(about 15 coins) but his grade is between MS62-MS64. To me, that's not right. If he tells all the coins are MS62 and the prices are higher I can understand it might be that the coins have an exceptional strike, outstanding coins. But how can two coins with great eye appeal in MS62, MS64 have the same price. If I were to sell him the coins I'm sure he'll be happy to pay according to the grade.

Sorry for hijacking the thread.