When It's Time to Sell Your Coin Collection: Part I
Posted on 1/19/2012
Many collectors spend many years, if not decades, assembling their collections of rare coins. Most make an effort to learn as much as possible about the series or area of numismatics they have decided to collect. Prudent purchasing is one of the best ways to ensure success when buying rare coins. Paying too much can result in years wasted trying to catch up with the market. I often have to remind collectors to be patient and wait for the right coin. Many want to pull the trigger at the first opportunity to purchase a scarce item they have been looking for. Experienced collectors and dealers know that they should look at several examples, if possible, before making any final decisions. Of course, this is not always possible as some great items rarely come on the market. Even then, one must be careful not to get too excited and grossly overpay for something.
After assembling a wonderful collection, at some point most collectors will face the decision of how to sell their coins. This can often be a very difficult dilemma. There are several options on how to sell your rare coin collection. This important decision is just as critical as those made when buying the coins. No one wants to leave money on the table. Why invest money for years and not try to maximize your efforts? Quite a bit of research is required to sell your rare coins for the most money. Sometimes the most obvious method may not be the best option for the coins you have purchased. Dealers often face this problem as well. Let’s examine one of the most popular methods of selling rare coins—auctions.
Everyone reads the incredible headlines about the fantastic prices rare coins sometimes sell for at auction. The current rare coin auction record is for a 1933 Double Eagle that sold for over $7 million dollars. Indeed, many of the greatest collections ever assembled have been sold at auction. I have fond memories of attending the sales of Eliasberg, Norweb, Garrett, Bass, Ford, Pittman and many others. All of these collections were consigned by heirs who knew little or nothing about the great coins they possessed. In this instance, selling at auction is obviously a sound decision. It would be difficult for even the most experienced expert to accurately value coins of this caliber. The size of these collections required multiple sales over several years in most cases. Auctions are clearly the best route for these types of collections.
The harder decision is for less-than-epic collections or for individual rarities. Many collectors have developed close relationships with dealers over the years that have helped build their collection. Many dealers invest considerable time with collectors hoping to have a chance to repurchase the coins one day. Some of the best rare coins I have purchased over the years have been collections that were assembled with my assistance. Increasingly, collectors are faced with the difficult decision of choosing public auction or selling through the dealer that helped them build their collection. Relationships are important, but everyone must consider the bottom line--getting the most for their coins. Several factors should be considered when trying to decide the best plan for your rare coins.
The biggest problem with rare coin auctions are the risks involved. Most auction houses strongly urge collectors to consign without reserves. This is to assure bidders that the coins will be sold regardless of price and that bargains are possible. It’s mostly to show bidders that they are not wasting their time. No one wants to attend a sale with unreasonable reserves and many buy backs. The auction houses also make more money with the highest possible sell-through rate. In recent years, reserves and buy back information has become much more transparent, which has greatly helped the auction business. For collectors however, this can be pretty scary. Unless your collection was formed decades ago, your financial success is not assured. Most collections do bring very satisfactory, if not spectacular prices at auction. It’s the uncertainty that can be unnerving for many. The recently completed FUN auction saw thousands of bidders spending over $50 million dollars for rare coins and currency. Many of the consignors were quite happy, if not ecstatic.
Another major mistake that collectors and many dealers make is to put coins at auction that they have been unable to sell by other means. This includes coins that are unattractive for the grade, or from an unpopular series. Auctions should not be considered for these types of coins. Most are bought back or the price achieved is often very disappointing. This, on top of auction fees, can be a terrible blow to the bottom line for consignors. Auction houses much prefer a beautiful collection of fresh material that will have a high sell thru rate. Most will happily give advice about consigning and your chances of success. Of course the auction house wants your consignments, so you must consider that conflict of interest as well. Collectors should ask for detailed estimates and advice on reserves when considering the sale of rare coins. You will probably be urged to sell the coins unreserved. As noted this involves risk. Also, you probably do not want to sell 80% of your complete sets and then have a handful of "no sale" coins leftover. Selling these "leftovers" becomes a real problem.
Bottom line, if your collection will be sold without reserves, you might want to explore other options.
NEXT TIME: OTHER OPTIONS FOR SELLING
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