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FMV what does it mean and why

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Best definition I have ever come across

 

Greetings everyone.

Food for thought...............

As most of you know I have offered my collections up for sale for a reasonable offer. With a number of contacts wanting to know what I wanted for this or that and having coins that I couldn't find any recent auctions for I finally found this definition of what Fair Market Value is and why it is. It was probably on the web site of Numismedia all along I just didn't see it till today as I was searching for one of my rare Franklin proofs. Anyway when I was using the FMV as a barometer to respond to these request I now feel that what I was conveying was more than fair to all. I know that some will say such things as What the market will bear, or Supply and demand, or it's value is what someone is willing to pay and all these are true but to establish a median point you need prices that are research backed with current info. Hence the FMV. A term I learned that really isn't that old in the numismatic field. So my fellow collectors, when someone ask what are you asking for a particular coin, etc. responding with the FMV is most fair to all concerned, both seller and buyer. Below is exactly as it is displayed at the Numismedia site.

 

WHAT IS FAIR MARKET VALUE ?

 

Fair Market Value is not a new term; however, it may be somewhat new to the coin industry. It refers to the price a dealer is asking for a coin, which is somewhat over his wholesale price. You may ask why you cannot buy coins at wholesale. Very simply, you can. All you have to do is buy an inventory, set up your office or store, dedicate yourself full-time, buy insurance, obtain a security system, hire employees, advertise your company name, and you are in business. You can compete with the other dealers on an equal basis. However, if you are not prepared to do this, then you must allow the dealers who are in business, who bear the risks of market cycles, a fair markup on the coins they inventory. These dealers have to make a living just like you do in your chosen career.

 

This is not their hobby, this is their career. Most dealers have spent many years in this business, fine tuning their skills to the point that they are experts in various fields. Granted, not all coin dealers are created equal. That is why competition, education, inventory, cash reserves, expertise, integrity, longevity, concern for the future of the industry, all meld into what makes up the ideal coin dealer in the eyes of the collector. You must also remember, that many collectors may be as much an expert in their chosen field as some coin dealers. Through the many years of education--reading about and studying coins, collectors develop a love for numismatics that goes beyond just a pure business aspect. They truly care about numismatics. There are many dealers who feel the same way. It is your job to select the dealers who you feel will represent your best interests as well as their own.

 

Getting down to brass tacks, if dealers are not allowed to make a fair profit for all their time and efforts in building a successful business, then they will not remain in business. The more dealers that are in business create more competition. If you create a competitive situation, dealers vying for your coins, as you want to sell them, then you will be able to maximize your returns. If there are fewer dealers making a profit in the coin business, competition will not be as fierce, and when you want to sell your coins, you will be at the mercy of the few remaining dealers. More dealers, more competition; it is that simple. This is free enterprise--the American way.

 

Now, what really is Fair Market Value? It is a reasonable charge over a dealer's wholesale price for a specific coin. "How do you determine that wholesale price on which you base the Fair Market Value?" As professional impartial coin price information providers, we search the entire marketplace to find the lowest wholesale price for coins that are available to purchase. Competition among dealers to sell their coins will force them to offer their coins at realistically competitive prices. The more coins that are available in a specific grade within a series, means that dealers will be more competitive with their prices. The Fair Market Value is based on the rarity of the coin. On rarer coins the markup may be, and should be somewhat higher.

 

I have served in several capacities in the coin business for 30 years. I have been watching, learning, and studying market capabilities, market momentum, market strategies, and market cycles for over 20 years. I have noted the marketplace transitions that have occurred over the last ten years. I have seen the market transcend from studying coins and trading coins on a sight basis prior to 1985; collectors were excited to look at and purchase coins they liked. With encapsulated coins, the marketplace tried to venture into an arena whereby coins could be traded just like stocks, without seeing them. This does not work for the multitude of coins. If coin collecting were created to trade just like stocks, there would be no need to ever look at the individual coins. There would be no coin collectors.

 

However, there are coin collectors; thousands, if not millions of them and there have been since Biblical times. If they don't like the appearance of the coin, a cheap price does not make it look any better, only more reasonable. We have now come full circle. Dealers and collectors want to view the coins they are about to buy. If dealers like the overall appearance of the coin, they will pay a fair price. If the collector feels the same way about a coin he/she likes, they also will be willing to pay a Fair Market Value for the coin. This Fair Market Value is the price we will report to you. This will give you a fair way of learning more about the coins you purchase and relieve some of your concerns about the value of those coins. Remember, "Cheap coins aren't nice, and nice coins aren't cheap".

 

Bear in mind that the more coins available within a given grade category, the more competitive prices will be. If a dealer owns a coin that is certified as a very low population, or, is a one-of-a-kind issue, this dealer may Ask any price he/she wants. In these rare instances, it behooves the collector to research this particular coin to determine whether they think this is a good value. If NumisMedia posts a price of an extremely rare coin, which may be the only coin offered (Fair Market Value or recent auction information), it is listed for reference purposes only. NumisMedia takes every precaution to determine the validity of prices posted on this system. However, NumisMedia makes no assertions or guarantees (implied or otherwise) that the coins offered by the dealers on this system are a good value. As a collector, you are obligated to study and learn about numismatics before you spend substantial amounts of money on rare coins. Competition among dealers will create the most competitive prices for coins. It is normally an appropriate course to check out the various dealers with whom you wish to do business. The dealers on this system are dedicated to numismatics. How they serve you, is strictly up to you.

 

P.S. in all the individuals who contacted me ONLY 1 individual asked me what the FMV was for something specific. I think that shows how we have become in our thought pattern. Selling and Buying is a 2 way street that should be fair to all parties concerned.

 

Mike

 

See more journals by moondoggy

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Excellent post Mike, all good points. Eye appeal is why many collectors buy rainbow toned coins for many times their FMV. Case in point, I just bought a rainbow toned Morgan for 3-4X FMV. I simply fell in love with the coin and thought it was reasonable, particularly since the e-bay listing had a 15% off sale on it.

 

I always felt that if I can purchase a coin at FMV or less, that I got a good deal. I'm happy when I can get a coin closer to greysheet value, but I never expect dealers to sell at greysheet. As I said I am happy to get a coin closer to FMV, especially if that coin looks good in the hand. You have a fine collection and I hope you get the best price possible for your coins.

 

Gary

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Wonderful post Moondoggy. From my buying experience ( not just coin related), I would say that for FMV to be accurately established two major conditions need to be met, 1- both buyer and seller are knowledgeable in the good or service and 2- a reasonable amount of time needs to occur for the transaction to be completed.

RichH

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Mike, That was a good read and plenty of truth to selling. I usually try to get the graded coins under FMV but always offer a trade of even FMV when it is available for coins I like to add to the "Ol" Collection.

 

SixMile

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Mike, That was a good read and plenty of truth to selling. I usually try to get the graded coins under FMV but always offer a trade of even FMV when it is available for coins I like to add to the "Ol" Collection.

 

SixMile

 

That seems FAIR, and same here

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This is just my opinion, but I was told by the dealers and collectors I trust that FMV can pretty much be nailed down by taking an average of what has sold at a major auction house (buyer's premium included) over a period of time. I use 18-24 months unless the coin is extremely popular.

 

If you are pursuing a highly popular coin, however, FMV is what you will pay for it, period.

 

All the blue sheet, grey sheet, secret hidden sheet talk by dealers is a bunch of "sheet" really! Coins are not like auto parts. There is no depreciation to this commodity like there is for auto parts and no progressive pricing scale as goes with auto parts. Most collectors are too savvy for unscrupulous dealers now. Most of the buying, selling, and trading I see going on now is done off grey +/- 10%. If a dealer is headstrong on wanting more, I simply say no UNLESS I really must have the coin. That being the case, I am still setting the FMV for it.

 

Sometimes the best deals are the ones you walk away from.

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Thanks for the excellent post.

 

Determination of FMV can be challening in some numismatic speciality areas where there are no online price guides. For example NumisMedia does not list prices for USA/Philippine coins and the primary reference book for USA/Philippine coins (U.S./Philippine Coins by Lyman L. Allen) is only published every few years and only lists prices up to MS/PF 65. If one reviews the actual selling prices of Gem quality USA/Philippine coins (especially USA/Philippine proof coins in PF66 and above) at major coin auctions it is readily apparent that FMV for many USA/Philippine coins is considerably higher than the book price. Keeping up with the FMV of high end USA/Philippine coins requires a lot of leg work monitoring major auction selling prices, Teletrade, ebay and price lists of dealers who specialize in USA/Philippine coins. Hopefully the day will come when the NGC and PCGS price guides list USA/Philippine coins. Until then determinating the FMV of high end USA/Philippine coins will continue to require a lot of homework for the serious collector.

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FMV is the amount at which a coin will transact between a willing buyer and a willing seller under no compulsion to buy or sell and having a reasonable knowledge of the facts.

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Best definition I have ever come across

 

Greetings everyone.

Food for thought...............

As most of you know I have offered my collections up for sale for a reasonable offer. With a number of contacts wanting to know what I wanted for this or that and having coins that I couldn't find any recent auctions for I finally found this definition of what Fair Market Value is and why it is. It was probably on the web site of Numismedia all along I just didn't see it till today as I was searching for one of my rare Franklin proofs. Anyway when I was using the FMV as a barometer to respond to these request I now feel that what I was conveying was more than fair to all. I know that some will say such things as What the market will bear, or Supply and demand, or it's value is what someone is willing to pay and all these are true but to establish a median point you need prices that are research backed with current info. Hence the FMV. A term I learned that really isn't that old in the numismatic field. So my fellow collectors, when someone ask what are you asking for a particular coin, etc. responding with the FMV is most fair to all concerned, both seller and buyer. Below is exactly as it is displayed at the Numismedia site.

 

WHAT IS FAIR MARKET VALUE ?

 

Fair Market Value is not a new term; however, it may be somewhat new to the coin industry. It refers to the price a dealer is asking for a coin, which is somewhat over his wholesale price. You may ask why you cannot buy coins at wholesale. Very simply, you can. All you have to do is buy an inventory, set up your office or store, dedicate yourself full-time, buy insurance, obtain a security system, hire employees, advertise your company name, and you are in business. You can compete with the other dealers on an equal basis. However, if you are not prepared to do this, then you must allow the dealers who are in business, who bear the risks of market cycles, a fair markup on the coins they inventory. These dealers have to make a living just like you do in your chosen career.

 

This is not their hobby, this is their career. Most dealers have spent many years in this business, fine tuning their skills to the point that they are experts in various fields. Granted, not all coin dealers are created equal. That is why competition, education, inventory, cash reserves, expertise, integrity, longevity, concern for the future of the industry, all meld into what makes up the ideal coin dealer in the eyes of the collector. You must also remember, that many collectors may be as much an expert in their chosen field as some coin dealers. Through the many years of education--reading about and studying coins, collectors develop a love for numismatics that goes beyond just a pure business aspect. They truly care about numismatics. There are many dealers who feel the same way. It is your job to select the dealers who you feel will represent your best interests as well as their own.

 

Getting down to brass tacks, if dealers are not allowed to make a fair profit for all their time and efforts in building a successful business, then they will not remain in business. The more dealers that are in business create more competition. If you create a competitive situation, dealers vying for your coins, as you want to sell them, then you will be able to maximize your returns. If there are fewer dealers making a profit in the coin business, competition will not be as fierce, and when you want to sell your coins, you will be at the mercy of the few remaining dealers. More dealers, more competition; it is that simple. This is free enterprise--the American way.

 

Now, what really is Fair Market Value? It is a reasonable charge over a dealer's wholesale price for a specific coin. "How do you determine that wholesale price on which you base the Fair Market Value?" As professional impartial coin price information providers, we search the entire marketplace to find the lowest wholesale price for coins that are available to purchase. Competition among dealers to sell their coins will force them to offer their coins at realistically competitive prices. The more coins that are available in a specific grade within a series, means that dealers will be more competitive with their prices. The Fair Market Value is based on the rarity of the coin. On rarer coins the markup may be, and should be somewhat higher.

 

I have served in several capacities in the coin business for 30 years. I have been watching, learning, and studying market capabilities, market momentum, market strategies, and market cycles for over 20 years. I have noted the marketplace transitions that have occurred over the last ten years. I have seen the market transcend from studying coins and trading coins on a sight basis prior to 1985; collectors were excited to look at and purchase coins they liked. With encapsulated coins, the marketplace tried to venture into an arena whereby coins could be traded just like stocks, without seeing them. This does not work for the multitude of coins. If coin collecting were created to trade just like stocks, there would be no need to ever look at the individual coins. There would be no coin collectors.

 

However, there are coin collectors; thousands, if not millions of them and there have been since Biblical times. If they don't like the appearance of the coin, a cheap price does not make it look any better, only more reasonable. We have now come full circle. Dealers and collectors want to view the coins they are about to buy. If dealers like the overall appearance of the coin, they will pay a fair price. If the collector feels the same way about a coin he/she likes, they also will be willing to pay a Fair Market Value for the coin. This Fair Market Value is the price we will report to you. This will give you a fair way of learning more about the coins you purchase and relieve some of your concerns about the value of those coins. Remember, "Cheap coins aren't nice, and nice coins aren't cheap".

 

Bear in mind that the more coins available within a given grade category, the more competitive prices will be. If a dealer owns a coin that is certified as a very low population, or, is a one-of-a-kind issue, this dealer may Ask any price he/she wants. In these rare instances, it behooves the collector to research this particular coin to determine whether they think this is a good value. If NumisMedia posts a price of an extremely rare coin, which may be the only coin offered (Fair Market Value or recent auction information), it is listed for reference purposes only. NumisMedia takes every precaution to determine the validity of prices posted on this system. However, NumisMedia makes no assertions or guarantees (implied or otherwise) that the coins offered by the dealers on this system are a good value. As a collector, you are obligated to study and learn about numismatics before you spend substantial amounts of money on rare coins. Competition among dealers will create the most competitive prices for coins. It is normally an appropriate course to check out the various dealers with whom you wish to do business. The dealers on this system are dedicated to numismatics. How they serve you, is strictly up to you.

 

P.S. in all the individuals who contacted me ONLY 1 individual asked me what the FMV was for something specific. I think that shows how we have become in our thought pattern. Selling and Buying is a 2 way street that should be fair to all parties concerned.

 

Mike

 

See more journals by moondoggy

Sorry, Mike, but I must disagree with your definition of FMV.FMV need not have anything to do with what a given dealer is asking. Or, for that matter, with "his wholesale price".For example, two dealers might each have a coin of the same type, date, grade and appearance for sale. One of them might have paid substantially more than the other. And/or one might have a much larger markup than the other. And/or a much higher "wholesale" asking price. None of that causes the FMV of his coin to be any greater than that of the other. And none of that necessarily has anything to do with FMV.This definition of FMV which I just found, appears on point to me:"The price that an interested but not desperate buyer would be willing to pay and an interested but not desperate seller would be willing to accept on the open market assuming a reasonable period of time for an agreement to arise."
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Without trying to offend my friend this makes no sense. What your definition is stating, if I am reading it correctly and I would like to believe I am, is you must wait a certain period of time until one (seller) or the other (buyer) is not desperate (if they are) and who or what determines desperation and even if they aren't they should wait for a day or is it a week or what exactly is a reasonable period of time until they either buy or sell the coin ????? This seems like an ambiguous definition to me?

 

Actually the post wasn't my definition but it was the best one I found that made the most sense to me. I found it at the Numismedia web site. They compile all the recent info to reach a FMV for coins. I know they do the leg-work and keep the current FMV's here at the NGC site.

 

Mike

 

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Without trying to offend my friend this makes no sense. What your definition is stating, if I am reading it correctly and I would like to believe I am, is you must wait a certain period of time until one (seller) or the other (buyer) is not desperate (if they are) and who or what determines desperation and even if they aren't they should wait for a day or is it a week or what exactly is a reasonable period of time until they either buy or sell the coin ????? This seems like an ambiguous definition to me?

 

Actually the post wasn't my definition but it was the best one I found that made the most sense to me. I found it at the Numismedia web site. They compile all the recent info to reach a FMV for coins. I know they do the leg-work and keep the current FMV's here at the NGC site.

 

Mike

 

No offense taken, but you are not "reading it correctly".

 

"The price that an interested but not desperate buyer would be willing to pay and an interested but not desperate seller would be willing to accept on the open market assuming a reasonable period of time for an agreement to arise."

 

In the definition I quoted above, no period of time is needed to determine that neither the buyer nor the seller is desperate. The definition merely means that, for example, the seller is not selling at an unrealistically low price because he has to raise the money within the next few hours. Or that the buyer isn't paying an unrealistically high price, because he needs to acquire the coin immediately. The transaction can take minutes, or even seconds.

 

 

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How about this, the price a coin would be bought or sold at by a large magority of the knowledgable collecting population where neither buyer or seller has an unrealistic motivation for buying or selling

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How about this, the price a coin would be bought or sold at by a large magority of the knowledgable collecting population where neither buyer or seller has an unrealistic motivation for buying or selling

 

That sounds about right to me. And it has nothing to do with the seller's cost or markup - nor should it.

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