The dilemma.

[truthteller]

Years ago, I used to buy estates, from watches to coins, from stamps to diamonds. Several coin dealers began talking one day about ethical dilemmas of purchasing coins from the public and older folks. One scenario revolved about actually telling the owner they have a rare coin or whether the owner should know they have a rare coin. The final conclusion of the group was if the owner asked for a price, the dealer should be truthful and disclose the rarity, but if the owner offered the coin at a price to sell, no disclosure was necessary. That got me thinking, what would be the BEST(lawful and ethical) course of action for this scenario:

 

The owner of a coin walks into a coin store. The owner is elderly(about 70), fairly well dressed and competent. The coin owner pulls out a 1796 quarter in nice UNC condition. The coin owner explains, the coin has been in his family for many generations, and wishes to get a quote, and will sell the coin if the price is right. The coin dealer surmises that if he offers enough, he will buy the coin, too little and the gentleman will walk out the door. The coin store owner is the only shop within 75 miles. This is not as easy as one might think.

 

YOU ARE THE COIN STORE OWNER: What would you do and why?

 

 

 

I will post my response tommorrow.

 

 

TRUTH

[EVillageProwler]

Since the coin is raw, I would grade conservatively (but still fairly) and then offer some fair %-age back of bid.

 

EVP

[spy88]

Personally, I would tell the gentleman what his coin is worth. I would then proceed to tell him I could have it slabbed for him (explaining why it would be a very good idea to do so) and would then attempt to sell it for him for a 5% commish.

 

If this scenario wasn't to his liking, I would at least have the satisfaction of knowing I had done the honest thing and he would be better able to handle any future transaction for the sale of it without getting taken to the cleaners.

[Wihlborg]

Since the scenario you gave is that the owner 'wishes to get a quote, and will sell the coin if the price is right' I would do as EVP & David said and offer the owner the options of a fair offer to buy, and a fair offer to sell it on commission. I would not try to rip-off the owner by being dishonest as to what the coin was worth.

 

Ethically, I believe this is would be the right way to handle your scenario.

 

 

John

[braddick]

I would confirm it wasn't a Gallery Mint creation and it wasn't I who was being scammed!

 

After that I'd show him a blue book and quote a price out of it.

 

I doubt you'de get very far explaining about "slabbing" and the such with a non-collector. It just wouldn't make sense.

The KISS principle would play out best in this scenerio I'd think.

[TomB]

This is a fairly complex issue on some levels and my rambling answer will show where my thoughts are on this.

 

To start with, I think the person's age, 70 years old, and the fact that there are no other close coin shops are simply red herrings. If the gentleman could find his way safely to a coin shop then he should be able to navigate his way through the web to find countless shops or web sites where he could find information. Even if one were to argue that a person of those years might not be familiar with the web, they certainly could not argue that they should not be familiar with a public library. In this case, the Red Book is in most libraries and this should be easily accesible to this person. Lastly, I don't generally feel sympathy for someone simply because they are 70 years old; my own mother is 70 years old and she is anything but frail and senile. So, to me, this situation is a generic person with a coin that they could easily obtain information on.

 

In general, I believe that anyone who has something to sell should do so in a responsible manner in that they do their homework prior to potentially offering a coin or collection for sale. Since the first post states that the coin owner

wishes to get a quote, and will sell the coin if the price is right

there is some uncertainty in what the coin owner actually wants. If the coin owner wanted an appraisal of worth then he should be willing to pay for that appraisal and the shop owner should give an honest appraisal or fear being sued. If, however, the coin owner is fishing for an offer without asking for an appraisal, then the shop owner should be able to offer anything to see if the coin owner will take it. Of course, someone might still sue the shop owner should they find out what happened, but at least the shop owner could state a plausible denial in that he/she believed the coin stolen and that is why they offered so little. The defense being that a coin of that magnitude should not be blindly offered and sold cheaply unless the coin was originally obtained in a less than honorable fashion.

 

My answer is that if I were the shop owner I would tell the person honestly what I thought the coin were worth and would predicate any offer on the coin being certified genuine, regardless of the certified grade. However, I would not argue that a shop owner other than myself should not offer as little as possible in this situation. It is up to the individual person's sense of right keeping in mind that everyone should shoulder responsibility for themselves and their actions.

[IrishMike]

Treat the gentleman like he was your father or grandfather. Offer a reasonable price that allows a reasonable profit.

[truthteller]

Excellent answers by all. Spy88 had the closest scenario to mine.

 

 

Today, the coin shop owner now has to think about ramifications of a simple or complex purchase before he/she writes a check or pays out cash. In California, and in many states, there are new laws on the books about elder abuse, which includes financial as well as physical, and which now alters the way business can be conducted with elderly or perceived elderly clients.

 

 

The key to the scenario is the age of the coin owner and his supposed knowledge of what he/she has.The coin shop owner has a duty of offer the most money that is acceptable to observers outside the industry, ie. a law enforcement official. Not to follow this means potential civil and criminal lawsuits in the future. To be safe and fair. I would do this.

 

Firstly, as a coin shop owner, I wish to make money, and not lose any potential deal to another. Secondly, I wish to offer good will, since the coin owner may have more to the collection than this very expensive coin. At the age of 70, a red flag goes up as far as proper dealing. Knowing the potential problems with an older customer, I would value of the coin in a range, with the caviat that third party grading service would maximize potential profit. In addition, I would spend time educating the coin owner as to the proper methods of disposing of the coin, ie. auction, private transaction, etc. Furthermore, the coin owner is asking me for VALUE, and due to my expertise, I am obligated to use my coin knowledge to offer a reasonble quote. I would try my best to work a deal with the coin owner, and not let the coin out of the shop. Thus, a commision would be the most appropriate course of action, limiting my liability, as well as making a fair return. 10% would be my minimum, excluding expenses. Auction would be the best course of disposal, whereby the coin owner would see the coin actually sell in a public transaction.

 

Again, the key to this scenario is age, and perceived ability of an older person to make decisions accordingly. Although many older adults can be able to appear competent, it's the perception by people outside the transaction that counts. In addition, an older person can quickly go from competent to incompetent quickly. If the scenario of age were changed to 35, then other strategies would apply.

 

 

TRUTH

[DonHeath]

Making an offer to purchase an item for inventory is many times more complicated than establishing the item's "value". I think I would be tempted with ALL sellers to offer as much honest information as I could regarding value, and to explain my offer. It's OK to say "To the right collector this coin is worth $1000, but I've got 11 of them and they aren't selling well for me. It has a wholesale value of $800, but I would only pay $650. If you have any others material to sell, perhaps I can pay a fair price for this one as part of the lot."

[shadroch]

I'm a comic dealer who often throws a few coins out when doing flea markets or street fairs. This thread has lead to many question.

Has a coin dealer been sued for low-balling a purchase,either to the general public or an elderly person?

Is the markup on coins really so low that you would offer

90 or95% of the value? I ask this because just last week,I flipped a few silver dollars I bought on e-Bay for twenty dollars to a coin shop for $27. While there,I saw he was selling 1999 Silver proof sets for $275.I asked him what he would pay for some and he said "around $150,maybe 175 if they were real nice.Thats a heck of a bigger markup than even 10%.

My answer would have been to tell the man,that if he was looking for an appraisal,I would charge him a fee,that I'd deduct if I purchased it. One of the reasons I display coins at all is that every so often,someone sees them and returns later with a few coins they have had for awhile. I generally offer them thirty cents on the dollar value that I percieve them to be worth.Mostly its just junk silver but I have gotten a few nicer peices over the years. Of course much that is nice to me IS VERY COMMON TO ANY STORE-OWNER.

[truthteller]

When a few hundred dollars is involved in the transaction, no one really cares, when tens of thousands of dollars are involved, people take notice. The coin in my scenario is worth tens of thousands in lower grade uncirculated and worth possibly $100,000 in high grade uncirculated. So, if the store owner buys the coin for, let's say $8,000 and sends it in for grading, comes back high grade from PCGS and is worth $90K, and the store owner sells it for $100K, then this transaction becomes very, very suspicious. Granted, the store owner may not have surmised the coin would grade that high, but to someone looking from the outside, the 'old man' got 'robbed'. Would you be upset if your 75 year old grandmother went to a car dealer and sold her cherry 1932 bugatti roadster to the local car dealer for $2000, only for the dealer to sell it for $500,000?

 

 

 

TRUTH

[MikeKing]

Yes, I'd be damn upset.

That's bad karma and what goes around comes around. NO doubt about that.

[AEATON-migration]

I believe in Karma,

If you score big for the goat's ignorance, nice for you this time round, but count on either getting caught and sued for 10x, or going out of business in the long run.

 

I'm the old man, comming to your store - I think I got a good offer and took the 8g, but be sure I'm watching what you're doing with my coin, and if I don't like it I'll bite you. Either through a lawyer, or the press.

 

JMO

[Architecht]

Doesn't all of this center around what a fair profit is?

 

It's the same as price gouging investigations, or price regulations, or anti-trust issues, or legal limits on interest rates for loans etc. etc.. All of these things always revolve around capping the profit someone can take in a transaction to a "fair" level. The difficulty lies in determining what's fair.

 

I don't think the key lies so much in how the request is phrased, or what their goal was or whatever else. The key lies in honesty and collecting a fair profit. Most people in a particular business know what a "fair" profit would be by instinct. If you imagine an honest conversation like this:

 

 

The coin is worth $XXX to be honest. You could get it slabbed and graded for $YYY and that MIGHT bump the price to $. It also might not, depending on how that grading turns out. I'd be willing to offer you $AAA for it.

 

 

The difficulty comes in when $AAA is embarrasingly far from the worth of the coin, and it's situations where that's common that leads to outside interferrence with the industry - through governement or labor unions or whatever. THIS is the point at which the person making the offer starts asking themselves questions like...

 

IF they said THIS and THIS am I obligated to show them a clear picture of the difference between my offer and the worth?

 

They're basically looking for a justification to create a more embarrasing gap between the offer and the value WITHOUT having to look the owner in the eye, shrug, and just say "That's my offer." and face that embarrasment and outrage and possible rejection.

 

 

So the REAL question you're asking (it seems to me) is "If the seller doesn't phrase his three wishes EXACTLY right... as the genie... am I allowed to screw him?"

 

I don't know... are you?

 

Arch

[truthteller]

"So the REAL question you're asking (it seems to me) is "If the seller doesn't phrase his three wishes EXACTLY right... as the genie... am I allowed to screw him?"

 

 

You've made a complex situation too simple. Firstly, I firmly believe that EVERYONE has a duty to know the value of what they are selling. For older folks, the duty can shift to the buyer(shop owner) if the seller doesn't quite grasp values. When I purchased a new car years ago, the car dealer offered $100 for my trade in. Well, I KNEW my trade in blue booked for $2500 and I was willing to trade it for $1500, but not $100 So I KNEW what the value was. IF I had said yes to the $100 trade in, would I have been screwed? Yes, by my own stupidity for not knowing the value. This goes on everyday, with every dealer, in every field of business. ONE PERSON KNOWS MORE THAN THE OTHER, including dealer to dealer transactions. Knowledge pays for itself. So certain responsibilities are put upon both buyer and seller to know what is the fair value of the object for sale prior to a consumation of the transaction.

 

 

TRUTH

[Architecht]

I agree that everyone has a duty to themselves to be educated where money transactions are concerned. If you're not, you're in trouble.

 

Maybe we should look at it like this.

 

 

XXX is the profit that would normally result from two experts negotiating a fair price for something.

 

 

What justifies multiplying that by alot through the ignorance of one party? Somethings are clearly beyond the line. AT a coin. That's bad. Why? Because the buying party does not have the expertise to identify it. What if you make no reference to the toning, but only present it based on grade/type? Are they dumb if they offer you alot of money based on toning that you know is fake, but they don't?

 

Does the vulnerability of the seller play in? What if that coin is being sold by a 12 year old? It's his. He found it in the back yard.

 

What if you offer a fair price TODAY, but you KNOW that the price of that coin is about to sky rocket. The seller doesn't. That's ok, then, right? You're profiting off of your own expertise, then. But what if you know that because of inside information? Ask Martha Stewart.

 

There are a million what-if's, and each of them works differently on each of us. The only thing we know is fair is this:

 

"XXX is the profit that would normally result from two experts negotiating a fair price for something."

 

It's got something to do with wanting business transactions to be win/win as opposed to win/doesn't-know-he-lost-big. You're right, it's a complex situation.

[ziggy29]

Getting here a bit late amidst the ethics discussion, but I'd think if I were a dealer, I'd give a range of values in which I thought the coin would sell for in auction (erring on the side of being conservative), and offer to do the legwork (and use my reputation as goodwill) for a fixed percentage of the sale price (5-10%, maybe, depending on how much I had to do).

 

If I thought it would sell for $15-$20,000, I'd probably tell them $10-15K, figuring a high surprise is better than a low surprise and that this would sharply reduce the chances of major disappointment.

 

A small-time coin dealer in a shop probably wouldn't have the money to purchase the coin at fair value, nor are they likely to have many customers lining up to spend that much money. The best chance to sell is through auction, and I'd probably say so. Now if I'm a major dealer that regularly sells rarities, I might buy it at (say) 80% of what I'd plan to charge for it. But if I'm not a large dealer that regularly sells 4- and 5-figure rarities, definitely, I'd offer to help them sell it at auction. I'd expect more of a profit if I had to keep the coin in my inventory, advertise it, insure it in my possession and all that stuff.

[braddick]

I still like my Blue Book suggestion...

[coinman1794]

"So the REAL question you're asking (it seems to me) is "If the seller doesn't phrase his three wishes EXACTLY right... as the genie... am I allowed to screw him?"

 

I have to agree with arch, here! He is right on the money.

 

 

Firstly, I firmly believe that EVERYONE has a duty to know the value of what they are selling.

.

 

I couldn't dissagree with you more and, I'm affraid that your own statement is way too simplistic. Let me explain:

 

First off - While it certainly would help to know the value, not all people are able to price a coin, and they rely on the professionals to do so. Further, and, to debunk the notion that was put forth earlier about going on the internet and finding prices, etc. etc., let me ask - How many casual observers, to the coin market, know how to grade? or authenticate? If you can't grade, you can't price! If it's not real, say its an expert forgery, how are you to know? Right there, I have outlined my reasons for dissagreement. And, they are quite sound.

 

Further, I think that someone who is not knowledgeable in coins who acquires a coin, possibly through an inheritance, for instance, has absolutely no obligation to be familiar with pricing for that coin upon taking it to a dealer for evaluation/sale etc. Rather it is the dealers responsibilty to be fair and honest in his evaluation and with his offer. If you are not, you are not reputable, pure and simple (When the seller makes the offer, it is something different. But, even if it is low, I would still suggest informing him of the true value, anyway. I'll get to this later.) Just because the seller knows nothing doesn't mean you can screw him! It's one thing to buy a coin from a dealer at his price and cherrypick a winner because you know more than him, but making a lowball offer to buy from someone when you know that you are screwing that person is something entirely different. The fair dealer sets his price based on what he knows about the coin. It's the price he thinks its worth, he isn't screwing anyone, and the buyer isn't being screwed. It is the price setter that holds the power in any transaction, and he has the most responsibility to be honest (This is the key, and this is also why I say that a seller who sets a price too low, falls into a diferrent category, as I mentioned previously. If a seller is going to set the price, then he certainly shoud know what he's doing, and it really would be stupid to do so. He states what he want's for his item, and you can either buy it or not. If it is rediculously low, I would recommend telling him, though). However, a dealer who purposly lowballs someone is outright stealing from the seller. He is using his authority on the subject, as well as his negotiating position, to manipulate an unsuspecting seller. Keep in mind, it is likely that the seller takes the coin to a dealer so that it can be valued, or at the very least, he assumes that the dealer, who SHOULD know more about coins than he does, will treat him fairly in assessing his coin and making a reasonable offer. While, based on the posts I see here, this is flawed logic on the part of the seller, as it does not seem to be in tune with reality. It is based on an age old honor system called...ethics. I'm glad you used the car example because it is a good one to relate this to. Was it fair, or ethical, for the car dealer to offer $100 for the car? No! Of course not! That dealer was not reputable. He was a liar and a crook, abusing his position of authority on the subject! And further, just because it happens all the time doesn't make it right! So, of course it's not fair for the dealer to lowball on the coin!

 

Ethics, virtue, reputation, honor, morality...all shot to hell, I guess

 

For older folks, the duty can shift to the buyer(shop owner) if the seller doesn't quite grasp values

 

So, you can try and screw anyone who isn't senile?

 

 

I mean no offense to anyone with this response. I am merely expressing my pointed opinion on the matter, based on the post I have seen.

[truthteller]

" Just because the seller knows nothing doesn't mean you can screw him! It's one thing to buy a coin from a dealer at his price and cherrypick a winner because you know more than him, but making a lowball offer to buy from someone when you know that you are screwing that person is something entirely different."

 

 

Is it different? Maybe not. I stand by the premise that you should know the value of what you are selling, anything. If you want full value for an item, pay for an appraisal, whether it be coins, cars, legal advice, tax advice. You have to work for information or pay someone to do it for you. One can maximize the value of a coin by auction. Does the auction house do this for free? No, you pay for the service. You can sell the coin on consignment. Does the dealer do this for free? No, you pay for the service. You can sell the coin to a dealer. Yes, and you get less than what the coin is worth by not paying for service. Again, the coin seller has options, and some options require work and/or knowledge. A seller cannot stand behind the shield of ignorance and say 'I dunno what it's worth', then expect to get the highest price.

 

 

TRUTH

[coinman1794]

Actually, it doesn't have to be the highest price or full value, but merely, a fair price. What I said was, we as dealers should never purposely rip off the seller. We can offer a wholesale price, or a price that, in our judgement, is reasonable for the coin. I certainly would not expect to have an appraisal done in order to get a dealer to offer me a fair buying price. It all comes done to reputation. Be reputable and honest in all your dealings.

 

The question of auctions and taking it elsewere, etc., is somewhat off topic. Further, VERY FEW people outside the coin market even know who is represented on our current coins, let alone that there are coin auction companies, and coin magazines, and grading services, and big coin dealers, and even the coin market itself! Most people are clueless when it comes to coins, and they bring there coins to professionals and trust their word! The man in the senario is asking to sell his coin and expects an offer from the dealer that is reasonable and fair. It is up to us dealers to be reasonable.

 

If I were that dealer, I would tell him exactly what he had and what I thought it would be worth. And, if I had enough money to make a reasonable wholesale offer, I would. I would not, however, try to screw him over, simply because he didn't know he had a very rare coin. It just plain ethics to me. Am I missing something here? Sure, it pays to know what you have, but again, you can't just magically grade your coin and figure out it's value yourself if you don't know about the coin market and you have no starting point. Those people take their coins to a professional. For most people, it is the that local shop that tells them what they have. From their they can decide what to do next. And if they are asking for an offer, make one - a fair one (At this exploritory stage, how can the seller advance to the next step if the dealer has already started lying by undervaluing and underrating the sellers coins?) If they ask what the coins are worth, tell them you can do an appraisal for a fee.

[Leothelion]

What if the old fart was selling 100 ounces of gold and asks the same question, "what is it worth?" Is there an obligation to educate the old man?

Unfortunately this is not always the case but I believe someone will take that responsiblity, down the road, to make it a fair deal! For what comes around, goes around and that's the last thing anyone or dealer should want! To be labeled as a scam artist!

 

Leo

[shadroch]

Again,this is from a comic dealers point of view,but I can't see how it is different no matter what you are selling.

People list thousands of items daily on e-Bay.For someone to say that they should be entitled to anywhere near what the item would sell for in a transaction between two experts is absurd.

Why did I spend endless hours learning the ins and outs of my chosen profession or hobby.If someone wants a professional appraisal,let them pay for it.I agree that there is a certain line you shouldn't cross as far as lo-balling,but you are setting the bar much too high.

We live in a society where informaton is available for the asking. If someone is too lazy or stupid to get an idea what any given item is worh,its not my problem.Any dealer has spent enormous hours learning his craft,establishing networks ect,ect.

When I take a car in to get repaired,I don't expect the same treatment or prices my mechanic gives his stock car buddies.They are his peers, I'm not.

To say every transaction should be handled as if is a peer to peer one is ludicrous,imho.

[Architecht]

" To say every transaction should be handled as if is a peer to peer one is ludicrous,imho. "

 

 

You're right, that bar is probably too high. There is a value to the knowledge gathered by someone over time, and they have a right to pursue a profit for it. But that standard of the price between 2 experts (not 2 buddies who work a mutually beneficial exchange, but 2 experts... say a knowledgable coin collector and a dealer, not 2 dealers) is not a bad place to start.

[coinman1794]

Of course knowledge pays! It's perfectly fine to go to a professional who is suppossed to know his stuff and find cherries in his inventory that he overlooked. He is suposed to know his stuff. This is common practice in coins, and this is perfectly legitimate. It is quite another to take advantage of unsuspecting people who come to you for advice, and I'm sorry, but you don't need any knowledge or experience to take candy from a baby.

[golfnut99-migration]

This is an easy one.Treat the customer like you would want to be treated, period.

A dealer is in business to make a living, and should make a reasonable profit.

A onetime customer will become a regular if treated fairly.

[Architecht]

That is an interesting parallel though... if we expect a dealer to live up to a certain standard of fairness, do we expect the same from ourselves? If we find a monster rarity in a dealer's inventory that they missed... are customers obligated to try and achieve a "fair" price as well by offering more than the dealer wants? (Whatever "fair" is.)

[braddick]

Like Dealers, the public demands large corporations to treat us fairly and when they don't we want them all strung up.

But, use a coupon for .50 cents off a bar of Dove soap on a bar of Dial instead, and all is right with the world.

[jramsey-migration]

The "Ethical" thing to do is, tell the owner that his coin is BU, and that these coins in BU trend between $ and $ retail. A dealer could offer between $ and $. The difference between high and low price would be a grade which you don't feel qualified to give. That would require a concensis of experts. But you are willing to pay $ now (Bottom of the BU scale for dealers, and take the risk of it's having been cleaned in the past, it being AU 58, Not MS60.) I believe that answer would allow the buyer to look at him/herself in the mirror each morning without feeling that they took advantage. In business it's best to be honest as possible since your reputation is at risk. You can find another coin, you can not repair a damaged reputation no matter how hard you try!

[Oldtrader3]

Personally, I would be inclined to educate the customer a little. Show the person a grading book, help grade the coin and then show them a Grey Sheet. Explain the dynamics of the buy-sell equation to them and offer them a fair price if you are interested in the coin.

 

When I was a kid, I worked part-time in an Art Gallery (on Cape Cod) sweeping floors and dusting pictures. One day an older man came in and looked at all the paintings. He was dressed in an out-of-date suit and no one paid any attention to him. I was done with work for the day and spent some time talking to him and showing him around. Turns out, that he was Pierre DuPont's father-in-law.

 

Moral: you can't tell who you are talking to, or what else they may have to offer.