Two things happened last week that reminded me just how important good preparation is when it comes time to sell a coin or collection. First was my experience in appraising a rather substantial collection of decimal coins and notes, second was getting a free newsletter on trading shares.
The decimal coin & note collection was held by a client of mine that I've known for a number of years. He's steadily accumulated pretty much a complete set of NPA-issued products (uncut sheets of decimal notes, annually dated folders, note & coin portfolios etc etc) as well as a stack of items from the Royal Australian Mint - proof and uncirculated sets, PNC's (stamped first day cover with a coin included in it) and a range of other items.
He was quite aware going into the valuation that the catalogue value of an item wasn't exactly what a dealer would pay for it, however he was a little surprised to learn that most collectors do their best to pay less than the catalogue value for most items they buy, and that the average price that an item sells for on eBay (as an example) is significantly less than catalogue value. This in itself wasn't a problem, as it is reasonably easy to get access to transparent sales data to confirm that argument, however it wasn't pleasant for him to learn that.
Once I was assured that the client was aware of the market conditions, and how demand for many coins had been affected by the economic downturn, I appraised the entire collection (which covered some 63 A4 pages!) Two days later I determined that the collection which had cost some $48,000 and had a catalogue value of some $80,000 had a commercial or "wholesale" value to a dealer of around $25,000. The client took the news reasonably well (or so I thought), we made arrangements for the transaction to take place and I sent through an itemized breakdown of the collection's value. That was when I got a fairly truncated response stating he had changed his mind and was going to keep his collection after all. It's not my place to question the wisdom of this decision, however I certainly hope he doesn't continue to buy dozens of the PNC's & mintmark dollars that the RAM issues with the idea that he's going to fund his retirement with the proceeds!
It is always disappointing as a dealer to encounter sellers that don't get what they hope for when selling, this encounter was yet another example of this taking place. I really do wish that selling was always as easy as buying - wouldn't it be great if all that took place is the buyer walked into a coin shop, placed the item or collection for sale on the dealer's counter, and the payment was made immediately at a pre-determined price that was widely known and agreed upon as being a fair rate. It can take literally seconds or minutes to buy a coin, however rarely does it take that long to sell one! It often doesn't take a lot of time when the buyer is well informed about the market and current values, however when a seller is not that experienced, it can take quite some time to learn all of the relevant information verify it and then to absorb it!
This situation resonated strongly when I read a recent newsletter issued by Colin Nicholson, a full-time share trader that also conducts seminars on the subject. In the course of reviewing a book, he makes the point that:
"Over the years, I have noticed that when I speak about what stocks to buy and when to buy them, I invariably attract a full house. However, when I speak on how to sell stocks, the audience is substantially smaller. This is an important observation, because it says a great deal about where the audience is currently on the learning curve to becoming a good trader.
At least half of the audience at the presentation on buying are still at the start of the journey of learning the craft. These would be traders are still at the point where they mistakenly think all they need is to find the right stock to buy and profits will fall into their lap. Very unfortunately, many of them may not reach the level of mastery of the art of trading.
On the other hand, the people who come to the presentation on selling have reached the point where they understand that the selling decision is critical to the process of making successful forays into the market."
It's incredible to think that the attitude many collectors have towards success in collecting or trading coins is also evident when it comes to trading shares - can you even imagine a stack of collectors turning up to a seminar on "How To Sell Your Collection"? It'd be inconceivable!
Since coins and notes don't generate an income, the case could be made that selling plays a much greater role in profitable coin trading than share trading, this is the reason why I believe that it's imperative collectors get ready to sell well before the time comes. If you're to have your investment in rare coins work out the way you want it to, you need to know just how the selling process works - why dealers pay the prices they do, and just what needs to be done in order to ensure there's a happy ending for all concerned.
I know there will be a stack of collectors reading this thiking to themselves "I'll never sell these things, so this doesn't apply to me", in which case - we don't need to remove the joy of collecting by making the experience overly commercialised. For those guys that have finances higher on the agenda, learning about the market really works is going to be an essential part of their education! How can you go about doing just that? Best thing to do is to either observe others going through the process or test the waters yourself by off-loading a duplicate or an otherwise unwanted acquisition. By attending a few auctions, you'll be able to see in real time just how much items in your area of interest are making, how popular they are and who is buying them. If the items you collect are traded on eBay (this is the best way of learning what the values of most decimal coins and notes are worth), then viewing the sales online with fresh eyes is an excellent idea. Talking to your local dealer about the state of play for any items you're looking to offload will also be productive, as will attending a coin show or two to gauge what's hot and what's not.
And remember the old adage - prior planning prevents particularly poor performance!