Dealers: how do you decide what to pay for a coin?

[commoncents123-migration]

This is a question generally directly at coin dealers who do most of all of their business online, but if you own a brick and mortar I'd like to hear from you too. I'm generally speaking of US coins in the $50-$500, maybe up to $1,000 on occasion range... How do you decide what to pay for a coin? What price guide is your gold standard? When you pay a price, what factor(s) make you confident you will be able to re-sale the coin for a reasonable profit in a reasonable amount of time?

[BillJones]

The main thing that a dealer must consider is what price will he be able to get for the coin? After you figure that you work back from there to get a gross margin (selling price less purchase price). The faster the turnover, the more a dealer can pay for an item relative to selling price. But that doesn't mean that he will pay a strong price. If you have an immediate sale for something, you tend to be wiling to pay more for it within reason.

 

Sometimes a dealer has to buy some coins he doesn't really want in order to get the coins he really wants. In that case you might pay half the selling price because you may have the items for months or sometimes even years before you will sell it.

 

As to price guides, there is the Gray Sheet, major auction results and dealer bid price computerized networks that are more current than the Gray Sheet. Retail price guides can play a role, but once more they are a starting point from which you would backward.

 

As to what a dealer buys or wants to buy, that varies from dealer to dealer. As it is with everything else one man’s feast is another man’s famine. If a dealer is not in the token business, he won’t have much interest in rare tokens even if the price of the piece offered is cheap. When selling coins, it’s just as important to know to whom an item should be offered as well as what price should be charged or offered.

 

[michael]

billjones sums this up extremely well in his answer

 

bottom line it is how fast and at what price can the dealer sell the coin he is considering buying?

 

and based on the opportunity costs involved and courtesy buys he needs to make to get the coin(s) in the collection he wants makes a greatr variable

 

basically it is experience and mostly if you got customers ready, able and willing to buy from the dealer---RIGHT NOW makes the best buying prices from the dealer to the customer selling to the dealer

[thebeav]

billjones sums this up extremely well in his answer

 

My thoughts exactly.......

 

Have a good Memorial day folks !

 

Paul

[James_OldeTowne]

I think you almost have to start with the greysheet, realizing that there are some coins that sell for somewhat more, and many for somewhat less. For example, a common seated coin in "fine" is something you buy at a substantial discount, and sell at a small discount off greysheet, because there aren't too many customers lining up for those. But expect to pay at least sheet for an 1877 Indian, or a 1916-D dime.

 

I generally try to pay right at sheet for the more modern stuff I enjoy, and always expect to pay 10% - 15% over sheet for nicer early material, like bust halves or early dollars. Premium copper will cost you MUCH more than sheet, and so will bust quarters.

[chinook]

Of the last 9 1877 IHCs in G-4 auctioned at Heritage and graded by PCGS, NGC or ANACS, 8 sold for less than bid.

 

In this market, unless it is a truely special coin, you can buy for bid or less, so expect offers from dealers to be quite a bit back of bid.