By SCOTT A. TRAVERS
Let’s Make a Deal was a popular TV game show for many years. Host Monty Hall gave crazily costumed contestants a chance to exchange boxes for what was behind a curtain, or curtains for the contents of their boxes. Some ended up with prizes worth thousands of dollars, others with gag gifts worth a good laugh but not much more.
Coin buyers and sellers are constantly making deals. Some end up doing very well for themselves, while others learn later that the joke was on them. Unlike the contestants on Let’s Make a Deal, however, those who negotiate deals involving coins don’t have to operate strictly by guesswork. They can arm themselves with facts, figures, insights and common sense and emerge from just about any deal with at least fair value – and perhaps a good deal more.
Negotiating is both an art and a science.
It’s an art because it requires the use of your sixth sense – your intuitive feel for people – and this cannot be quantified. It’s a science because there are rules that can be quantified and defined.
Deal-making is second nature for professional numismatists. “Deal,” after all, represents two-thirds of the word “dealer.” You don’t have to be a dealer, though, to grasp and even master the art (and science) of deal-making.
At the outset, it’s important to understand some conditions that are peculiar, if not unique, to the rare-coin marketplace.
First, the circle of dealers with whom you will do business is relatively small and frequently intertwined, and many dealers have long careers and also long memories. This places a greater-than-usual premium on maintaining good relationships all around. It would be foolish to risk alienating a dealer permanently, and unnecessarily, for some trivial gain obtained through subterfuge. The dealer you bluff today for a $100 discount on a $1,600 coin may convey this information to someone you will desperately need, a year or two from now, as an ally in a six-figure transaction. Similarly, the vest-pocket dealer you snub at a show may hold that against you – and still be around to do so 10 years later. The moral is: Tread carefully.
Second, coin transactions can be subtle, even tricky, and often may require not only good information and a high degree of intelligence, but also lots of moxie – what some describe as “street smarts.”
My firm doesn’t maintain an inventory; my stock in trade is connections, not coins, along with my ability to negotiate deals. Over the past quarter-century, I’ve been engaged as a deal-maker by some of the most renowned captains of industry – from bankers to computer experts to government agencies and law firms. It truly amazes me that some of these people – people who routinely handle deka-million-dollar transactions – are babes in the woods when it comes to our street-smart industry.
The chief executive of one of the nation’s largest stock-brokerage firms hired me on an hourly-fee basis to walk him through the process of obtaining a $50,000 refund from a Long Island telemarketer – on coins whose return privilege had not yet even expired. He had me prepare a script and sit with him while he spoke on the phone to a company representative, asking for his money back. He got his refund – as well as an education about buying rare coins.
To maximize your return when buying, selling or trading rare coins, you need to develop self-confidence and become an astute deal-maker.
I’ve prepared a list of tips gleaned from my nearly 25 years of hands-on experience dealing in coins worth millions of dollars. Master these and you will be in position to make the best possible deal every single time.
Know the value of every coin you hope to buy or sell, or the value of the services for which you are negotiating. Buying or selling a coin without knowing its current market value is like navigating a plane without a compass. I know of one dealer who wrote a book in which he advised readers to start out by offering half of what a dealer was asking for any given coin. Suppose the dealer was asking $5,000 but the coin was really worth only $1,000: It would be foolish to open negotiations by offering $2,500. Similarly, if you are negotiating an auction contract, you should prepare some careful projections of the auction company’s costs. When I negotiate an auction contract, I’m intimately familiar with what it is costing the auction firm to conduct the sale – preparation of the catalog, labor, insurance, the staging of the sale at a hotel or convention site, and other expenses. Let the auction company make a profit; give it an incentive to obtain high prices for your coins. But don’t overpay unnecessarily.
Let your adversary make a living. Being a coin dealer is often a tough job. It’s demanding and expensive to maintain and transport an inventory of valuable coins from city to city, show to show, sale to sale. Respect the time and effort a dealer has spent preparing for a negotiating session with you, and strive for an outcome that’s fair to both of you. Remember what I said earlier about the low level of turnover in this field. It isn’t in your best interest to squeeze the other guy for a few extra tenths of a percent on your profit margin – not if you’re planning to do business again with that dealer or others with whom he converses.
Master the use of your emotions. With coins as with cards, a poker face will help you come out ahead; it keeps other people guessing about your intentions. No matter how badly you want to buy or sell a particular coin, try to appear composed and unemotional. Keep in mind, however, that every now and then, judicious use of the right emotional reaction at an appropriate time can clinch a deal for you.
Never bluff, and never lie. Bluffing and lying will always get you into trouble, damaging or destroying your credibility for future dealings. They might even ruin your chances of making the deal that’s at hand. Mean what you say and say what you mean. Let me assure you, if I make an offer to buy a coin and say that a certain number is my “last and final offer,” I won’t move up from that number by even one red cent. I would rather walk away from the deal – and I have! – than go back on my word.
Let the other party make the first offer. Deal-making is one situation where, quite often, it doesn’t pay to go first. There’s always a chance that the other person will offer to sell you a coin for substantially less than what you expect, or offer to buy a coin from you for substantially more than you would have asked. If you do have to go first, start very low in making an offer to buy. You can always come up, but you rarely can go down.
Simplify the issues. “Keep it simple, stupid” is rather good advice when it comes to making deals involving rare coins. Variables tend to slow down negotiations. Boil down your discussions to a single issue or number, or at most a very few. Otherwise, you may never reach an agreement. In one recent dispute on which I served as an adviser, the other side came in with a complicated set of proposals under which some coins would be traded, others would be sold, and still others would be bought back. In all, there were 33 variables. I advised the lawyer representing the side that retained me to ask the adversary to buy back virtually all of the coins at one specific number.
Never make an offer you’re uncertain about, and never withdraw an offer once you make it. In buying or selling rare coins, your word is your bond. You must be careful never to vacillate or dither after you make an offer. You’ll infuriate the person with whom you’re making the deal and possibly kill any chance of future deals.
Go to the top. Pick the person with whom you want to deal, and be certain it’s someone who has the needed authority – someone who can say “Yes” without getting somebody else’s permission. In many cases, this eliminates the middleman or the middle-woman. This, in turn, often eliminates unnecessary fees. It also averts the good-cop, bad-cop tactics which many coin companies like to use when working out a deal.
Find out who really owns the coin. Many coin dealers do business routinely among themselves and handle coins on “memo” from other dealers. For this reason, it’s important to negotiate with a coin’s true owner. To gain this information, you need to be very active and astute at coin shows – be “in the loop,” so to speak. But it’s worth it. Why pay Dealer X’s bottom-line price of $12,000 when Dealer Y really owns the coin and will sell it to you for only $8,000.
When making an offer, count out the money or write out a check on the spot. Being offered cash or a check on the barrel head can be very persuasive to someone selling a coin. Say a dealer is asking $2,000 for a coin and you’ve offered $1,600. Chances are, he might suggest splitting the difference. But if you pull out your checkbook and write a check for $1,600, he may simply say, “OK, I’ll take it,” saving you $200.
Always assume the position of power. Simply stated, this means giving yourself every psychological edge. When sitting down with someone to negotiate a deal, always try to get the most dominating seat. In order to look businesslike; wear a suit and tie. Above all, never let yourself be vulnerable; always strive to be in command. At coin shows, in an effort to level the playing field, I often go behind the other dealer’s table and discuss any pending transactions back there, where we are on an equal footing. Some shows don’t allow this, so if you intend to engage in this practice, check beforehand to make sure it isn’t a violation – especially if you don’t have a table of your own at a given show. But many conventions permit this, especially if you have a table there. Ideally, try to appear in charge when you’re working on a deal – but if that isn’t possible, at least try to level the playing field.
Be flexible and be ready to change the conditions of the deal on the spot. Sometimes a deal may seem hopelessly deadlocked. Rather than lose it entirely, be prepared to improvise and modify the structure in order to save it. Suppose you’re unwilling to pay more than $400 for a coin, but the dealer insists on getting $500. Look in his inventory for something else on which you can make up the difference – possibly a $600 generic gold coin you can sell elsewhere for $700. By adding that to the deal, you can still come out just the way you wanted. Similarly, if you’re negotiating an auction contract and the auction company won’t go any lower on its commission, you might ask the firm instead to guarantee you a photograph of that coin in the catalog. Or, if a large transaction is involved, such as the consignment of an entire collection, you might seek assurance that the auction company will do something extra to help promote it – something which might be very helpful to you in getting higher prices realized, but which would cost the company very little more, such as generating a special press release about the collection or perhaps displaying the collection at a show before the auction takes place.
Make the other person feel that it’s in his or her best interest to make the deal. Convince the other party that you, and only you, are the right person for this particular deal – that it’s an advantage selling the coins to you, rather than any other prospective buyer.
Don’t take things personally. This rule is last, but certainly not least. If a dealer rejects your offer or counter-offer, don’t go away mad. View negotiating as a game, even though the money involved is real. Keep a positive, enthusiastic outlook and leave the door open. He or she may even reconsider and make the deal with you after all.
COPYRIGHT © 2001, 2003, 2009 BY SCOTT A. TRAVERS
ALL RIGHTS RESERVED.