We just had an interesting conversation with a customer regarding her experience trying to sell an uncut sheet of 1929 small size national bank notes. We got to talking about why so few coin shops are equipped to make aggressive offers on rare pieces of paper money. We thought we would hit the highlights here for our readers.
First off, what classifies as a coin shop? The county I live in has a population of about 500,000 people. In my opinion there are only two establishments that I would consider true coin shops. There are, without exaggeration, at least 40 more shops that buy gold and also advertise as dealing in coins. Gold shops are not true coin shops. True coin shops usually have a name like Tom’s Coins & Stamps, Smith Rare Coins, Springfield Coin & Jewelry, or XYZ Coins & Currency. The business model of a coin shops usually breaks down to buying precious metals, buying numismatic items, and retailing numismatic items. The biggest misconception is that just because someone owns a coin store that he will also have limitless knowledge related to all coins and paper money ever issued. Many shop owners are collectors turned dealer as a retirement gig. They have specialties but they are certainly not all knowing. When it comes to paper money, we suggest that coin shops break down as follows:
-Has No Knowledge or Interest In Buying Paper Money (probably 50% of coin shops)
-Has Limited Knowledge and Offers Low to Play It Safe (probably 25% of coin shops)
-Has Full Knowledge but Offers Low Out of Greed or Limited Funds (probably 20% of coin shops)
-Has Full Knowledge and Pays Fair Prices (probably 5% of coin shops)
Remember, we are talking about true coin shops here. Gold shops are the absolute worst. You can pretty much forget about getting anything close to a fair or intelligent offer for numismatic coins or paper money at a gold shop. With that said, let’s look closer at each type of shop as they relate to paper money.
Type 1: No Knowledge – No Interest
We believe that approximately 50% of coin shops out there don’t care about paper money, aren’t educated when it comes to paper money, and have no interest in dealing with paper money. These are actually some of the most dangerous types of coin shops. They truly believe that all paper money is worthless or close to worthless. This usually stems from a bad experience early on in their collecting career. Or they simply might just truly only want to deal with coins. You could show them a bank note worth $2,000 and they might tell you to go home and frame it because it has no collector value. Their goal is to get you out of their shop as soon as possible. Shops with no knowledge and no interest often set you up to fall for the lowballers out there. One shop just told you your $2,000 note was worthless and the next shop offered $150. The $150 sounds pretty good.
The people who aren’t interested sometimes do the exact opposite of making you think your paper money is worthless; they make you think it is much more important than it really is. Instead of telling you to frame it, they tell you that it is priceless and it belongs in a museum. Then when you get an offer from a person willing to pay $1,800 for your $2,000 bank note it looks like a scam because the uninformed coin shop has set your expectations way too high. Our general advice is that if someone isn’t willing to make an offer on something then you should probably heavily discount whatever information they give you, whether it be high or low.
Type 2: Coin Shops Playing It Safe
A lot of coin shops want to be fair in their dealings, but they just don’t have the knowledge or expertise to make competitive offers when it comes to paper money. Our opinion is that about 25% of coin shops fall into this category. These are the types of coin shops who rely heavily on paper money price guides. If the book value of your note is $2,000 then they are going to offer $600. In their mind if they offer $600 then they can surely sell it for at least half of the book value ($1,000). A lot of these same shops always hedge their bets because many times they aren’t even confident if what you have is authentic. So you end up in a runaround situation where you wait weeks to get an offer while the coin shop finds an expert to take a look. Our advice would be that if a dealer can’t immediately price a collection and have a meaningful conversation about what you have then you probably aren’t getting an aggressive offer.
Type 3: The Sharks & The Crooks
The general public often assumes that every time they walk into a coin shop that they are about to be victimized by a ruthless dealer. Sadly, shops with a business model that borders on criminal are out there today. We estimate that one in five shops is doing business purely to rip people off. If we could relay some information on how to spot “rip-shops” then we would. However, they come in all shapes and sizes. These are the people offering 5-10% of the true value of paper money. They are usually pushy and nonchalant at the same time. Everything that you have is always common and they are doing you a favor by even making an offer. Once they make an offer they really apply pressure so that you don’t leave the store without selling. Many of these coin shops don’t have a strong financial position. So even if they wanted to make a fair offer they simply wouldn’t have the funds to pay you. As a seller of paper money, you can usually avoid these types of shops simply by asking around a little bit and educating yourself.
Type 4: The Good Guys
This type of coin shop almost doesn’t exist any more. Shops where you can walk in off the street and get the same offer for your paper money that a specialist would give you are few and far between. Maybe one in twenty shops is like this. They are usually run by a lifelong numismatist. And we don’t mean someone who started collecting coins at age six but was an electrical engineer for thirty years before opening a coin shop. We mean someone who has been making a living dealing with coins and paper money for decades. The good shops making aggressive offers usually have someone on staff who has collected or currently collects paper money and understands how to grade and what makes something special. These are the types of people who might actually get excited and show some emotion towards your money. They can tell you more than you care to know about the history of what you have.
Think You Are Getting Ripped Off?
Do our descriptions of the bad coin shops sound a little too familiar? Tell us about it. We always give free opinions about the value of paper money. Send some scans or digital photos of what you are looking to sell and we can provide our offer.