Hypothetical Coin Ethics Question

I'm not a dealer, but am friends with several. Here's my take on the situation.

Offering $50 for a $1000 coin does seem unreasonable. If I saw it happen, I would assume the dealer was unaware that the coin was actually worth $1000. If it was knowledge that he should have known, I would be extra careful in buying from that dealer, and certainly wouldn't recommend anyone take their coins to that dealer to sell. I wouldn't interrupt the deal, but I would ask the dealer to explain his actions after the customer had left.

As to the general sentiment that dealers that make lowball offers are always trying to rip off the clueless, I would disagree. While I don't doubt that there are plenty of shonky dealers out there who'd rip off their own grandmothers to make a few bucks, there are plenty of reasons why a perfectly honest dealer might do that, too.

In many cases, a dealer offers a low price because they don't really want it. They might already have a dozen of the wretched things and are having trouble getting rid of them, or it's an area of numismatics that they don't specialize in and they know that none of their regular customers would want it. They're hoping the customer will leave and try to find a better offer elsewhere; if this is the case, the dealer will usually suggest to the customer that they do exactly that.

Or they might know that only their buddy on the other side of town has the knack for getting "full price" for those coins, so they'll have to on-sell the coin to that other dealer (for considerably less than full retail price). A coin that has to go through a whole chain of on-selling before it's finally sold to a collector will have to have been originally bought far below market value, if all the dealers are to gain an "honest" profit margin.

Or they might actually be experts in that field, and know that the current "book value" for that coin is hopelessly optimistic and nobody is prepared to actually pay that much for them. It might be worth while to check the dealer's display cases to see if there are any others of those coins for sale there, and see what price the dealer is asking for them.

Finally, dealers that have been around a while develop an instinct for people. If they think a customer is dodgy (for example, trying to flog off stolen coins for quick cash) they'll do whatever it takes to try to discourage them from selling their coins. No dealer wants to be stuck with stolen goods; they'd end up losing both the cash and the coins.

I have to disagree here because it depends on the coin in question. You have to remember this coin could sell in the next hour or it could sit on the dealer's shelf for years, with his money tied up in it. If it's a coin that is not widely popular or has a niche market, he may have trouble moving it for much of a profit. Setting an arbitrary 70% level is a random guess really, and you really can't set a fixed amount/percentage without knowing all the details.

As a general note, someone mentioned that the person selling the coin should do some research before selling it to get some idea of the value. I couldn't agree more. I don't advocate dealers taking advantage of people, but come on. In the internet age, there's no reason someome should walk into a shop completely ignorant as to the values of the items they want to sell. If they don't want to use the internet, then get a couple of offers at least for comparison.

It would be out of line for you to say anything. Right or wrong its not your business nor your place to say anything. I think those who know little to nothing about coins to do a little research on what they're trying to sell so they go into the dealer well informed. Ultimately its the customers responsibilty.

Good advice in theory but not so practical in reality for someone who has absolutely no interest in coins. To the average person on the the street, concepts such as a mint mark, condition of a coin, or die varieties are completely vague and foreign. Most people who sell coins at B&M shops do not have the desire or time commitment to study numismatics. They are usually selling something that was given to them by grandma 30 years ago or a relative just died leaving them a box of stuff. They expect a dealer to be the "expert" and give someone a reasonable offer based on actual value, not a lowball offer with no bearing in reality. You can tell people to "go buy a RedBook" or "look it up on the internet" all day long and 95 times out of 100, it will not make a bit of difference because the person attempting to look it up has no idea what they are actually looking at. That is how you get people thinking a common 1930s Buffalo nickel is worth big money and they don't understand why that little S under the date and the VDB on the back of a 1909 Lincoln Cent makes it worth $1000+.

Numismatics is not exactly some simple little hobby that can be picked up in a couple hours, there is a reason why it is known as "the hobby of kings" When it comes to complicated things, it is sometimes best to rely upon expert advice as long as said expert will not try to take advantage of you. I want to liken numismatics to modern automotive repair, another complicated endeavour. How many people here can fix a major problem on any car built since, say 2000 or so? Sure, I recently replaced a few minor emissions components on my 2000 model car but if I had an electrical issue or major engine failure, the Olds will be headed to a repair shop for the experts to look at because I know that is outside the realm of my automotive knowledge. Automotive shops can abuse that lack of knowledge just like a coin dealer. Hello sir, I think you need a refill of blinker fluid and your muffler bearings need to be lubricated, that will be $500 please It happens and IMO it just as unethical as a coin dealer offering $50 for a coin that retails for $1000.

That's why I gave option B: take it to another dealer for another offer. :) I do realize that it can be alot of work, and overwhelming to the non collector, but if I was wanting to sell something of potential value like the $1000 coin used as the example, I would sure as heck do as much research as I had to in order to educate myself a little. It doesn't mean someone needs to spend hours upon hours doing research. The info is readily available, but for those who decide to take the lazy/easy way out by not doing even some remedial research are setting themselves up to possibly get burnt or leave money on the table.

On a different not, going back to the post saying that a $1000 coin should be bought for $700, I neglected to mention one obvious fact. What if this dealer has a handful of these coins sitting in his vault or on his display shelf, and they have been there for a long time? I would think a 50% of bid offer wouldnt be unfair.

I think it is one thing to cheat a couple of elderly ladies, who have absolutely NO idea about the values of the coins, out of hundreds of dollars, knowing darn well what the pieces they are selling are worth, and another thing to try and to the same to a much younger and computer savy person who could do his/her homework first!
Older people trust the experts, speal dealers.
For me it is a clear cut case....
Honesty will always prevail. Fairness is always top on my list.
Profit... yes, every business must / should make it. HOWEVER, baltandly ripping someone off because they do not know because of age or just do not know.... well, that is unethical, uncalled for and in my mind criminal!

I am sobbing a bit inside...

But back on the topic, yeah, the overhead can add up for a dealer, but I think they should also try to cut their operating cost by having their selection online like APMEX. I guess they can also try to just sell more (sell in volume) at a lower price than just trying to make the whole day's return on one coin.

I think a dealer is looked up to for advice from many people and this action is taken by most dealers as an easy prey for profit. I think Bio put it clearly, that not all who seek the opinions of dealers are computer savvy and since when is a dealer not entitled to a profit, just not at the cost of cheating people out of what they have.
I do not think ALL dealers are honest/decent people, just as I do not think they are all deceitful/scammers, somewhere in the mix there are dealers who still are very honest and if a dealer is entitled to a profit and lowballs the estimate given, he/she should also explain the real value and make a fair offer.

I do not believe people here actually do not expect dealers to be "some what" honest with those who clearly do not know and came to them for an honest opinion, this would not be acceptable to me if I found out this took place with someone I knew and they were ripped off.Would'nt the right thing to do be give an opinion on the coin(s) and suggest them to get another opinion, people are very, very self centered, profit hungry creatures.
I know dealers that, while they are not wealthy dollar wise, they are rich in many other ways......