. . . Continued from page 1

Back-end Loads (aka Seller's Fees)

After sticking it to you with a 15% buyer's fee, this is where they stick you again with a seller's fee, usually 5%. On top of that, some auction firms won't let you or will try to talk you out of putting a reserve on a coin. A reserve is basically the minimum bid you will accept before you're willing to sell the coin. What some auction firms want you to do is put in a buyback bid instead of a reserve. Basically, they make you put in a bid (your minimum) before the auction starts. If no one bids higher, you basically win your own auction. While the auction firms are nice enough not to charge you the buyer's fee for a buyback, the kicker is that they usually still nail you with the seller's fee.

But seller's fees are something you can actually do something about. If you are going to sell a coin by auction, you must do it through a trusted dealer. Dealers that do a lot of business with auction firms get special treatment when it comes to consigning coins for sale.

Basically, the deal is that they don't get charged a seller's fee and they share in the buyer's fee with the auction firm. For example, a dealer that consigns a coin may have a deal where they get 105% of the hammer price (some dealers get more so it pays to shop around). Basically, the auction firm is giving them one-third of the buyer's fee. The way this benefits you is that you can work out a deal with your dealer where you get 100% of the hammer price (or possibly a little more), and the dealer gets the 5% that came from his portion of the buyer's fee.

This is one of the few win-win situations in numismatics. In addition, those auction firms that don't like taking reserves from individuals have no problem taking reserves from dealers. The end result is that you completely avoid the 5% seller's fee and possibly even get a little more than the final hammer price.

Another possible advantage that has been my experience is that you may get your settlement money from the auction firm a little quicker if it goes through the dealer. It seems that those dealers tend to get paid first when they issue the settlement checks. Maybe this has just been a coincidence, but I'm not a big believer in coincidences.

If you take nothing else away from this section, at least take away the fact that it is definitely in your interest to consign coins, especially high value coins, to auction through a dealer that has one of these deals in place. I know that I will never consign a coin directly to an auction firm again.

Find a Dealer You Trust

Finally, if you do decide to invest in rare coins, one last piece of advice that I have is to find a couple of dealers you trust to do business with and not just one dealer. If I had only dealt with one dealer, I never would have known about the 5% fee that is standard for having a dealer represent you at auction which would have saved me thousands of dollars. The only way to know if your dealer is treating you fairly is to be able to compare that dealer to others. After awhile, you will learn which dealers are treating you the fairest and you will tend to do most of your business with them.

Whether you consider yourself a collector or investor in rare coins, I hope this article has provided you with something of value in your pursuit of putting together a rare coin portfolio. The one thing I can honestly say is that if I had it to do all over again, I certainly would not do it the same.