Selling your coin(s) back to the dealer(s) you bought it/them from......

[MarkFeld]

I posted this to the "other" forum earlier today and have received some excellent comments and questions. I thought I'd do the same here and see what you folks have to say:

 

Earlier today, Sir Clankeye and I had a brief email chat about this topic and we thought that it might make for an interesting thread. If we were right, it was MY idea . If we were wrong, it was HIS idea.

 

These questions are directed to both collectors and dealers for your viewpoints and are not meant to flame either group.

 

1) What responsibilities, if any, should/does a dealer have to make an offer to buy back a coin from a client?

 

2) If you think the dealer does have such a responsibility, is there a particular minimum percentage of the original selling price that you deem appropriate/fair? If so, what percentage? If you answer this question, please base your reply on the assumption that there has been no price movement in the coin, since the time it sold. I say that, because, if the market has fallen or risen significantly, the original selling price should not necessarily be relevant.

 

Your thoughts, opinions and questions are hereby welcomed. It is my sincere hope that this can lead to some good dialogue among and between collectors and dealers and that everyone will be civil (insert icon of coinguy1 dreaming here).

 

 

[Leothelion]

And 3. Assumeing the dealer is a honest person and not a shyster, I would say this matter should be dealt with at the time of the purchase. Otherwise, the probability and the buyback will vary widely. But my personal feelings are, depending on the coin and it's availability, I would expect an agreeable yes and anywhere from zero to 100% buyback but it depends on the coin. For a 09-S VDB, 1877 IH, 16-D Merc, 16 SLQ and so on, 80 to 90%. More common dates may getb 0 to 20%.

 

Leo

 

[Hoot]

1) What responsibilities, if any, should/does a dealer have to make an offer to buy back a coin from a client?

 

2) If you think the dealer does have such a responsibility, is there a particular minimum percentage of the original selling price that you deem appropriate/fair? If so, what percentage? If you answer this question, please base your reply on the assumption that there has been no price movement in the coin, since the time it sold. I say that, because, if the market has fallen or risen significantly, the original selling price should not necessarily be relevant.

 

I'll answer both questions at once. And I realize that there will be many perspectives on this interesting issue...

 

The first responsibility of a person selling a coin, dealer or not, is to state precicely what the arrangement is for return, i.e. 100% "buyback." After that, a dealer who is satisfactorily honest with clients will buy an average coin back for 10-15% less of what the client paid (given no change in market value), as this is a reasonable sum to remarket and sell the coin for its value. I think that the more expensive a coin is, the less this margin should be, adjusted by the difficulty of speciality of sale. Two honest people should be able to agree upon such a sum. Agreement here is the crux of an ongoing postivie relationship of dealer and client.

 

Collectors (and I'm one) should know that the only way that coins stand a chance of appreciating significantly is to hold them for respectively long periods of time (20 years?), unless you are simply lucky and buy consistently well.

 

Hoot

[Wihlborg]

First let me state that I am a collector and not a dealer. With that said here it goes!

 

I do not feel that a dealer has an obligation to buy any coin back after a set return period, but I also feel that any decent dealer should be happy to buy a coin back for -10% – 15% as long as the market conditions are satisfactory.

 

What I mean by this is that if a dealer sold a coin to a collector and a year later the collector walks into the dealer’s shop and wants to sell the coin back to the dealer, but in that time the market has taken a hit and the dealers inventory is moving very slowly I do not believe the dealer should be obligated to buy the coin back.

 

On the other hand, if the market is good an honest dealer should be happy to buy the coin back.

 

John

 

[gmarguli]

I posted this to the "other" forum earlier today

 

We're the second thought forum now??? sniff sniff

 

 

1) What responsibilities, if any, should/does a dealer have to make an offer to buy back a coin from a client?

 

None. It might make good business sense to take certain steps, but the dealer really has no responsibility to buy back a coin. What responsibility does a car dealer have to buy back a car after the owner gets tired of it?

 

 

2) Is there a particular minimum percentage of the original selling price that you deem appropriate/fair? If so, what percentage? If you answer this question, please base your reply on the assumption that there has been no price movement in the coin, since the time it sold.

 

None. It's supply and demand. I'm sure a lot of people would have liked to sell back their 1903-O BU Morgans to dealers at 50% of the purchase price right around the time of the GSA hoard release. Supply/demand changes all the time. Assuming that supply/demand hasn't changed along with price, then I would say anything under 70% buy back would be wrong. However, slow moving items might require a larger spread as would more esoteric items.

 

 

 

It is my sincere hope that this can lead to some good dialogue among and between collectors and dealers and that everyone will be civil (insert icon of coinguy1 dreaming here).

 

Dealers are the devil. They want to do nothing but steal money from innocent collectors. They will all burn in hell. How's that?

[dakra]

1) What responsibilities, if any, should/does a dealer have to make an offer to buy back a coin from a client?

 

No, I don't think the dealer has any responsibilities in buying back coins.

 

 

-Dave

 

 

 

 

 

 

[Higashiyama]

1) What responsibilities, if any, should/does a dealer have to make an offer to buy back a coin from a client?

 

As most agree, absolute no responsibility. A dealer cannot be expected to be a "market maker" or provide liquidity.

 

2) Price if buyback

 

With that said, it will certainly enhance a long term relationship if a dealer can buy back coins, probably with a smaller expected margin than on coins acquired through other channels. For quality coins with a ready market, it would seem that buyback at 85 % would be plausible.

 

Again, in order to enhance customer relationships, if the coins are offered in trade to finance some new acquisitions, the dealer should be even more motivated to offer a buyback, on better terms.

 

 

And now, to try some of these new icons, a few thoughts on Pinnacle:

 

 

[darktone]

I have been in the used car business for years and there is a lot of similarities to the situation of buying back or taking on trade what was originaly sold by you but from my experience the car dealer that was honest and not out to make a killing on each customer was alway's able to make a fair offer on buying back or taking back on trade. mike

[Oldtrader3]

What has worked for me in the past is the dealer paying me 10-15% under sheet bid for a coin bought from that dealer (unless there is a "quality" premium involved). Or if there are problems (i.e. counterfeit MM), then I expect a full refund, no questions asked!

[bigd5]

I don't like the "automobile" comparisons. Unless you're taking your coin home and allowing it to "circulate" trading back a car and trading back a coin are much different.

On my reply over on the other side, I left out tradebacks. This is where I've received the most money (perceived) back for my coins. Trading back to the original dealer in a trade-up (?) situation. I've got a few that will give my 100% on the trade ins (depends obviously on how long I've actually owned the coin, but I'm so fickle it usually isn't too long )

Heck, I have one local dealer who will give me 100% tradeback on wholesale trade ins!!!

[darktone]

bigd5, I guess the point of my comparrison was to say if you sell something for it's true value you should be able to buy it back at a fair price. If a dealer sells a low end 63 to an unknowing customer claiming it to be high end for the grade and get closer to 64 money for it then he should expect to have a problem when the customer wants to up-grade or sell the coin back to him because even though he made a killing on the coin when first sold he does not want to be into a low grade 63 for 64 money.

 

[DonHeath]

I think there are several mitigating factors that would influence my expectation. If the dealer is a market maker in the coin, I would expect them to provide me with a buy figure, but if the coin I purchased was not in their area of specialty, I'd understand their choice not to. As for the buy or sell figure, I'd have no expectation of them except that they be market competitive both times, and if they weren't, I'd buy and sell elsewhere.

[MarkFeld]

Thanks for the straightforward and sensible answers.

 

Greg, you said "We're the second thought forum now??? sniff sniff"

 

Actually, you're the "third thought" forum, but I've been banned from posting to the ACG forum.

 

.

 

 

 

[bigd5]

Darktone, Agreed.

[Higashiyama]

Here is a very small comment on the arithmetic --

 

If the dealer buys back at 80 %, they are earning a 25 % margin -

 

(100/80) = 1.25

[rkfish-migration]

Great thread Mark!

Have enjoyed reading the responses on both boards!

 

Steve Twitty

www.pqdollars.com

 

[TomB]

I will state that these answers are to be considered as having an effect after any return window has expired. Having mentioned that, if there is nothing in writing at the time of sale, then the dealer does not have an absolute obligation to take any coin back at any price. However, depending on the coin, situation, market and customer, that may not be an acceptable position. In fact, I don't really like that position at all.

 

A repeat client or one that is pleasant to deal with will most certainly receive a higher buyback offer from many dealers than a one-time buyer or disagreeable person. I don't know that there is a universal minimum percentage as each coin is different. Also, depending on the size of the inventory that the dealer keeps, the buyback term(s) will/should change.

[jtryka]

You know, I've thought about this, and my idea probably doesn't really fit well with anyone else so far. I tend to view coin dealers as a hybrid between a traditional retailer and a broker-dealer. For near term activity, I think that dealers should behave more like a traditional retailer, with a specific stated return policy. This could be as custom as the dealer wanted to make it, like, 100% money back for anything that turns out to be altered or counterfeit. It could be a specific amount/percentage no questions asked, like a recent experience where I bought a coin from a dealer for $775 and he said if I changed my mind he would buy it back for $750. It may also include varying time constraints, like 7-day, 30-day etc. The important thing here is that the buyer understand the policy fully before the trade is made.

 

Once this initial period ends, I think that the dealer doesn't necessarily have an obligation to buy the coin back, but does have an obligation to make a bid. This is a very subtle difference, but it makes this phase more like a securities dealer. In stocks, market makers publish their own bids and offers on stocks they make markets in, and if they don't feel like trading in the stock, they will put their spread way out of the range of the rest of the market. No one will buy or sell to them, but they are still required to post a bid and offer. In the same way, coin dealers in my mind are required to do the same. Once the initial sale is made, if you come back 1 year later to sell, then the dealer has an obligation to make a bid. Now if it's a popular coin, they might bid very close to the current ask (i.e. they are selling the coin for $100, they might bid $90, a narrow spread is offset by higher liquidity). If the coin is something tough and esoteric that might sit in their inventory a while, they might bid far less (for example, many coin dealers just don't deal much in gold, so if I want to sell a nice Saint, they might only offer 70% of what I could get elsewhere, or 50% of retail). Well, that low bid causes me to move on and try selling it to a dealer that specializes in the area. The first dealer didn't buy it back, but they still made a bid. The fact that I felt it unacceptable is just fine. Now it's important to note here that the subsequent bid has to do with the current market at that time, not what you paid for it. Just as it's silly to think that your broker should offer you something close to the $200 per share you paid for Amazon.com stock 3 years ago, you should not expect a dealer to offer you close to $800 for the Krugerrands you bought in 1980. It works the other way too, so if you bought wisely, you could see the value of the coin increase over the time period involved. The point here is that the bid is just a part of the dealer spread, which represents the profit margin the dealer wants to make on the coin. Some dealers always want a straight % mark-up (like for every $1 I sell, I pay 80c). Other have variations depending on the volume, liquidity etc.

 

So that's how I feel it should work. There are two parts, the part of the gain/loss due to my ability to buy wisely, and the part due to the dealer taking his cut through the spread. If I feel that he is being unfair or greedy with his part then I stop dealing with that person. However, I try very hard not to blame the dealer for poor choices I make in buying. That is the really tough part.

[Todd-migration]

 

The dealer is under no obligation to buy back coins. It is always nice to have a client who is looking to sell, come back and give the dealer an opportunity to buy them back especially if they are PQ.

 

If a dealer makes an offer on the buy backs it all depends on the supply and demand of the coins. If the dealer has a lot in stock and there is not a whole lot demand you would not get as much from the buyback (does not mean you cant go elsewhere). That is basically what it comes down. I wish we could give 100% back but the truth is there is overhead the dealer is going to have to cover with every coin. So getting 100% most likely wont happen no matter how nice it would it would be but within 75% of the price has always sounded good to me, however it is a case to case situation.

 

The good thing is that there are means for the collector to sell the coins himself without losing much if any.

[true_grade]

Tuff one.........when asked about this......I ask the buyer if they would buy back any coins that I had just purchased from them, that usually gets the point across.

 

Next problem, unless coins are slabbed, you need to make extra sure these are the same coins.

 

And the major item........if not a regular customer that you don't want to lose, I'm in biz to make a dime, not a pawn shop.

 

So yes, you can buy back a coin(s), just not at what you sold them for. As for a percentage, that would depend on one's operating costs. But a general 10-20% “lose” by the customer should be expected.

 

TG